Starting off the week on a cautious note, the Indian Rupee edged down six paise to 83.44 versus the US dollar during early trading on Monday. The slight decline came as a direct consequence of the drop in equity markets and persistent outflows of foreign funds, sparking fresh unease regarding geopolitical strife flaring up in the Middle East.
Market participants tracked multiple factors, noting the robust performance of the US dollar in foreign markets and the crushing oil prices remaining defiantly above the USD 90 per barrel mark. Both elements contributed to the less optimistic mood among investors.
The initial trading session witnessed the rupee’s opening at 83.46 against the dollar after which it made a marginal upturn to settle at 83.44, translating to a six paise reduction relative to its last closure.
Previously on Friday, the currency wrapped up the day with a 7 paise depreciation, closing at 83.38 in comparison to the mighty US dollar.
Eyeing the US Federal Reserve’s anticipated stance, market experts discerned a strengthening dollar index, albeit marginally slipping by 0.08 percent to stand at 105.75. The index reflected a solid greenback when juxtaposed with a cohort of six major currencies. This movement was primarily ascribed to waning expectations around the US Federal Reserve slashing interest rates in the immediate future.
Meanwhile, Brent crude futures took a slight descent into the negative territory, dropping by 0.31 percent which pegged barrel prices at USD 90.17. This global oil benchmark serves as a vital indicator for influencing currency values of oil-sensitive economies, including India.
Back on the domestic front, the stock market didn’t fare too well, with the BSE Sensex, comprising 30 shares, plunging by 569.05 points. This equated to a decline of 0.77 percent, bringing the index to a level of 73,675.85 points. Similarly, the broader NSE Nifty followed suit, stumbling by 178.95 points which capped its loss at 0.79 percent, culminating at 22,340.45 points.
The outflow of foreign funds remained a persistent concern, as Foreign Institutional Investors (FIIs) were reported to be net sellers within the capital markets on the preceding Friday. Data from the exchanges confirmed that FIIs liquidated shares adding up to a significant Rs 8,027 crore worth.
In contrast, India’s foreign exchange reserves presented a favorable outlook, marking a substantial increment of USD 2.98 billion. This push culminated in a refresh peak for the reserves, hitting an impressive USD 648.562 billion by the end of the week on April 5th, as per the statistics released by the Reserve Bank of India (RBI).
The financial environs remain delicately poised, with investors and economic analysts keeping a close watch on global developments that could potentially sway market sentiments. As geopolitical tensions and economic forecasts continue to shape the ebb and flow of foreign investment and currency valuations, the rupee’s trajectory against the dollar will likely reflect these broader undercurrents influencing the global financial landscape.
