Indian Rupee extends decline to second day; ends slightly lower at 85.36/$

Indian Rupee today: The domestic currency ended 2 paise weaker at 85.36 against the US dollar, after ending at 85.34 on Tuesday

Indian Rupee pared early losses to close slightly weaker on Wednesday, extending its decline to a second day as a revival in the dollar weighed on sentiments. 

 

The domestic currency ended 2 paise weaker at 85.36 against the US dollar, after ending at 85.34 on Tuesday, according to Bloomberg. The local unit opened 29 paise weaker at 85.63 against the US dollar against the greenback. 

 

The currency has depreciated about 1.2 per cent in the month so far, after two straight months of gains. 

 

The US consumer confidence rebounded sharply in May from a near five-year low, driving global investors into dollar-denominated assets. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.01 per cent at 99.53. Further, the index is down over 8 per cent so far this year on US trade policy uncertainty and fiscal worries. 

 

However, long-term dollar weakness driven by rising fiscal deficit concerns, policy instability, rising uncertainty, and weak economic conditions is going to support the emerging markets, including the rupee, analysts said. 

 

Meanwhile, participants will also eye India’s upcoming industrial and manufacturing production data. Strong surprise data could offer further support to the rupee, but a miss could cause downside risks, according to Amit Pabari, managing director at CR Forex Advisors. 

 

According to reports, the currency also faced month-end dollar demand from importers, dragging the rupee lower. 

 

Weak equity markets, muted foreign inflows, and a rebound in crude oil prices were adding pressure to the currency, Pabari said. Meanwhile, Indian equity indices ended Wednesday’s choppy session in negative territory. The 30-share Sensex closed down by 239.31 points or 0.29 per cent at 81,312.32. 

 

The rupee’s movement this week will be primarily influenced by foreign fund flows into secondary markets, with several key economic indicators on the horizon, including the US Federal Reserve meeting minutes, first-quarter GDP data, and the Core Personal Consumption Expenditures (PCE) Price Index, according to Jateen Trivedi, VP Research Analyst - commodity and currency at LKP Securities. "In the short term, the rupee is likely to trade within a range of 84.80 to 85.75."

 

In commodities, crude oil prices advanced ahead of the OPEC+ committee meeting. Brent crude price was up 0.66 per cent to $64.51 per barrel, while WTI crude prices were 0.74 per cent higher at 61.34, as of 3:45 PM IST.