Rupee rises 8 paise to 84.38 against US dollar in early trade

Forex traders noted that lower crude oil prices in the international market boosted the local currency's recovery. At the interbank forex market, the rupee opened at 84.42 and gained further to 84.38 against the US dollar, up by 8 paise from its previous close.

Mumbai: The rupee recovered from its lowest level and appreciated by 8 paise to 84.38 against the US dollar in early trade on Monday despite a stronger American currency and sustained outflow of foreign funds.

Lower level of crude oil prices in the international market supported the recovery of local unit, forex traders said.

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At the interbank foreign exchange, the rupee opened at 84.42 and strengthened further to 84.38 against the greenback, trading 8 paise higher from its previous close.

On Thursday, the rupee fell 7 paise to settle at its all-time low of 84.46 against the US dollar. Forex markets were closed on Friday on account of Guru Nanak Jayanti.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.06 per cent at 106.68.

Brent crude, the global oil benchmark, rose 0.51 per cent to USD 71.40 per barrel in futures trade.

Analysts said that India’s inflation surge is putting additional pressure on the currency. Also, they said the record surge in the US Treasury yield has added strength to the dollar index.

Wholesale price inflation in India rose to a 4-month high of 2.36 per cent in October as prices of food items, especially vegetables, and manufactured goods turned dearer, according to government data released on Thursday.

Retail inflation breached the RBI’s upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices.

On the domestic equity market front, Sensex was trading 125.08 points, or 0.16 per cent lower, at 77,455.23 points. The Nifty fell 20.15 points, or 0.09 per cent, to 23,512.55 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth Rs 1,849.87 crore, according to exchange data.

The latest government data released on Thursday showed India’s merchandise exports in October rose by an impressive 17.25 per cent year-on-year, highest in over two years, to USD 39.2 billion, while the trade deficit widened to USD 27.14 billion on a sequential basis.

Meanwhile, the country’s forex reserves dropped by USD 6.477 billion to USD 675.653 billion for the week ended November 8, the RBI said on Friday.