Rupee weakens 14 paise to 86.57 amid global uncertainties and firm dollar demand

The Indian rupee fell 14 paise to 86.57 against the US dollar on Thursday, pressured by global risk-off sentiment, strong dollar demand from oil importers, and elevated crude prices. The US Fed kept rates unchanged, projecting two future cuts.

Mumbai: The rupee depreciated 14 paise to 86.57 against the US dollar in early trade on Thursday, as safe-haven demand amid prevailing risk-off sentiments pushed the dollar index higher.

Forex traders said geopolitical uncertainties, prevailing risk-off sentiments, and elevated crude oil prices collectively pressured the local currency, while robust dollar demand from oil importers dented investment sentiments further.

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At the interbank foreign exchange, the domestic unit opened at 86.54 against the greenback, then touched an early high of 86.49 and a low of 86.57 against the greenback in initial trade.

On Wednesday, the rupee depreciated 9 paise to close at 86.43 against the US dollar.

“As uncertainty grips the market, the rupee could remain on the weak side in the days to come. For the day, the range is expected between 86.25/75 as we await happenings in the Middle East, as also on the trade front,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Meanwhile, the US FED kept interest rates on hold despite Donald Trump’s demand to cut them by 250 bps.

“The signals from FED were mixed as they retained projections for 2 quarter-point rate cuts this year,” Bhansali said.

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 98.96.

Brent crude, the global oil benchmark, fell 0.26 per cent to USD 76.50 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex advanced 33.49 points, or 0.04 per cent, to 81,478.15, while the Nifty rose 22.90 points, or 0.09 per cent, to 24,836.45.

Foreign institutional investors (FIIs) purchased equities worth Rs 890.93 crore on a net basis on Wednesday, according to exchange data.