Finance
The Indian rupee fell over the 86 level in Wednesday’s intraday session, owing to expected foreign outflows and rising oil costs.
Bloomberg reports that the native currency closed 31 paise lower at 85.90 against the greenback, down from 85.59 on Tuesday. During the session, the local unit plummeted 0.51 percent, the most since May 22, breaking through the critical 86 barrier. The euro has fallen by 0.61 percent this week.
The dollar-rupee pair is projected to move in a narrow range, with strong resistance near 86.00-86.20 and immediate support around 85.00-85.20, according to Amit Pabari, managing director of CR Forex Advisors. A breakout on either side could cause a directional shift, he said.
The Reserve Bank of India (RBI) remains well-positioned to step in, with a comfortable reserve buffer of $693 billion, limiting the scope for any sharp rupee depreciation, he said. “Additionally, robust domestic bond issuances are supporting the rupee.”
All eyes will be on the RBI’s six-member monetary policy committee (MPC), which will meet today and is expected to lower the repo rate by 25 basis points (bps) to 5.75%. The committee plans to release its policy review on Friday.
According to Jateen Trivedi, VP research analyst – commodity and currency at LKP Securities, the rupee traded sluggish as foreign investors continued to sell ahead of the RBI’s policy statement on Friday. “Sentiment remained under pressure due to persistent fund outflows and the dollar index rising above the 99.00 level.” With crucial economic data coming from the United States, volatility is projected to remain high, he said.
India’s dominant services sector continued to expand in May. S&P Global’s HSBC India services purchasing managers’ index (PMI) rose marginally to 58.8 in May from 58.7 in April.
Meanwhile, overseas investors continued to liquidate domestic shares, putting the euro under pressure. Global funds reduced their stakes in Indian companies during Wednesday’s trading session due to a flurry of block trades. On Tuesday, foreign portfolio investors continued to be net sellers for the third consecutive day.
Meanwhile, the Dollar Index remained steady following Tuesday’s gains, as the US April JOLTS report revealed a surprising increase in job opportunities, exceeding market forecasts. The increase in the number of job opportunities boosted the dollar even higher. The dollar index, which measures the greenback against a basket of six major currencies, fell 0.03 percent to 99.19.
Crude oil prices rose further following OPEC’s decision to increase supply. Brent crude prices were up 0.46 percent to $65.93 per barrel, while WTI crude prices were 0.46 percent higher at 63.70 as of 3:44 PM IST.
Source: BS
