Rupee falls 22 paise to 85.98 amid rising crude prices, trade slowdown

The rupee fell 22 paise to 85.98 against the US dollar in early trade on Wednesday, weighed by rising global crude prices and weak trade data. However, later gains were supported by FPI inflows and a weaker dollar overseas.

Mumbai: The rupee declined 22 paise to 85.98 against the US dollar in early trade on Wednesday amid a rise in global crude oil prices and a decline in exports and imports, which indicated a slowing economy.

However, FPI inflows cushioned against steeper losses in the local unit, according to forex traders.

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At the interbank foreign exchange, the rupee opened at 86.02 against the dollar before inching up to 85.98, down 22 paise from its previous close.

The rupee appreciated 16 paise to close at 85.76 against the US dollar, tracking a weak greenback in the overseas market and a decline in global crude oil prices.

“The rupee has fallen on a rise in dollar index (overnight) and a fall in Asian currencies against the dollar. We expect RBI to protect 86.00 levels,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

“While India’s trade deficit came lower than expected, it also indicated a slowing economy with exports and imports both down,” he said.

Brent crude, the global oil benchmark, was up 0.22 per cent to USD 68.86 per barrel in futures trade.

“Brent oil prices rose slightly on expectations of a steady demand from the US and China, the world’s two largest oil consumers, amid an improving economic outlook. That has reversed two days of decline as the US president threatened tariffs on the purchase of Russian oil,” Bhansali added.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped marginally 0.01 per cent to 98.60 after strengthening overnight.

On the domestic equity market front, the Sensex declined 103.16 points to 82,467.75 in early trade, while Nifty was down 56.75 points to 25,139.05.

India’s exports remained unchanged at USD 35.14 billion in June, while the trade deficit stood at USD 18.78 billion during the month, the latest government data showed on Tuesday.

Foreign institutional investors (FIIs) bought equities worth Rs 120.47 crore on a net basis on Tuesday, according to exchange data.

Meanwhile, an Indian commerce ministry team is in Washington for another round of talks on the proposed bilateral trade agreement (BTA). The four-day talks, which started on Monday, will conclude on Thursday.