Rupee falls 3 paise to 94.92 against US dollar, ends six-session rally

The rupee fell 3 paise to close provisionally at 94.92 against the US dollar, snapping a six-session winning streak. A sharp equity market decline and crude oil prices weighed on the currency despite support from RBI measures

Mumbai: The rupee pared its initial gains and settled 3 paise lower at 94.92 (provisional) against the US dollar on Monday, weighed down by a sharp fall in domestic equity markets and a recovery in crude oil prices.

The rupee snapped its six-session winning streak and ended in negative territory amid continued pressure from foreign institutional investor (FII) outflows and elevated crude oil prices.

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At the interbank foreign exchange market, the rupee opened at 94.90 against the US dollar. During intraday trade, it touched a high of 94.75 and a low of 94.97 against the American currency.

The rupee settled at 94.92 (provisional) against the greenback, registering a loss of 3 paise from its previous close.

On Friday, the rupee extended its upward momentum for the sixth consecutive session, settling 10 paise higher at 94.89 against the US dollar, supported by the Reserve Bank of India’s measures to curb spot dollar demand.

During the week ended October 16, the Indian rupee appreciated by approximately 2 per cent, supported by the RBI’s measures to manage dollar demand.

“RBI measures may help stabilise short-term currency movements, but a sustainable recovery will depend on lower oil prices, improved foreign capital flows and easing external pressures,” said Gaurav Garg, head of research at Lemonn.

Garg further noted that while the rupee’s recovery was encouraging, its sustainability would depend on whether global and domestic fundamentals improved alongside RBI support.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent higher at 101.93.

Brent crude, the global oil benchmark, was trading 1.17 per cent lower at USD 108.58 per barrel in futures trade.

“We expect the rupee to trade with a positive bias amid overall weakness in the dollar and softening US Treasury yields. However, elevated crude oil prices and FII outflows may cap sharp gains,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.

On the domestic equity market front, the Sensex tumbled 876.37 points to settle at 73,852.90, while the Nifty dropped 257.20 points to 22,888.95.

Foreign institutional investors (FIIs) turned net buyers, purchasing equities worth Rs 1,165.92 crore on Friday, according to exchange data.

Meanwhile, according to RBI data released on Friday, India’s foreign exchange reserves fell by USD 8.578 billion to USD 726.027 billion during the week ended October 9.

In the previous reporting week, the reserves had declined by USD 12.952 billion to USD 734.606 billion.