Rupee weakens to 83.01 against dollar in early trading

Forex traders noted that the downturn in domestic equities and foreign fund inflows dampened investor sentiment.

Mumbai: The rupee depreciated 5 paise to 83.01 against the US dollar in early trade on Friday, tracking a strong American currency and elevated crude oil prices in the international market.

Forex traders said a negative trend in domestic equities and foreign fund inflows weighed on investor sentiments.

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At the interbank foreign exchange, the rupee opened at 82.96 against the dollar and touched an early low of 83.01 and a high of 82.95 in initial trade.

On Thursday, the rupee settled on a flat note at 82.96 against the US dollar, after the Reserve Bank decided to keep the key policy rate unchanged for the sixth time in a row to maintain a tight vigil on inflation.

“The RBI kept rates on hold in its MPC meeting held on Thursday and also did not give any indication of when it will be able to cut rates prompting a fall in equity markets. It said that it cannot give any forward guidance leaving everyone guessing on the timing of the rate cycle,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said.

The RBI maintained status quo in its monetary policy for the sixth consecutive time and left the repo rate unchanged at 6.5 per cent, in line with street expectations.

The central bank revised FY24 GDP projections higher at 7.3 per cent from 7 per cent and projected FY25 GDP at 7 per cent. It also projected CPI (consumer price-based inflation) in FY25 lower at 4.5 per cent.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 104.19, higher by 0.03 per cent.

Brent crude futures, the global oil benchmark, fell 0.04 per cent to USD 81.60 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 41.59 points or 0.06 per cent lower at 71,386.84 points. The broader NSE Nifty was down 30.25 points or 0.14 per cent to 21,687.70 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 4,933.78 crore, according to exchange data.