Rupee slump deepens; ends 31 paise lower after breaching 86/$ intraday

Indian Rupee today: The domestic currency closed 31 paise lower at 85.90 against the greenback, after closing at 85.59 on Tuesday

The Indian Rupee came under pressure and weakened past the 86 mark in Wednesday’s intraday session amid likely foreign outflows and firm oil prices.

 

The domestic currency closed 31 paise lower at 85.90 against the greenback, after closing at 85.59 on Tuesday, according to Bloomberg. During the session, the local unit fell 0.51 per cent, the highest since May 22, to weaken past the crucial 86 level. The currency has depreciated by 0.61 per cent so far this week.

 

The dollar-rupee pair is expected to trade within a range, with strong resistance near 86.00–86.20 levels and immediate support around 85.00–85.20 levels, according to Amit Pabari, managing director at CR Forex Advisors. A breakout on either side could trigger a directional move, 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 begin its meeting today and is expected to cut the repo rate by 25 basis points (bps) to 5.75 per cent. The committee is scheduled to announce its policy review on Friday.   

Rupee traded weak as foreign investors remained in sell mode ahead of the RBI policy announcement scheduled for Friday, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Sentiment remained under pressure due to persistent fund outflows and the dollar index rising above the 99.00 level." With key economic data lined up from the US, volatility is expected to stay elevated, he said. 

India's dominant services sector maintained its growth in May. The HSBC India services purchasing managers' index (PMI), compiled by S&P Global, stood at 58.8 in May, marginally up from 58.7 in April.

 

Meanwhile, global investors continued to sell domestic equities, keeping the currency under pressure. A flurry of block deals saw global funds pare off stake in Indian companies in Wednesday's trading session. Foreign portfolio investors remained net sellers for the third straight day on Tuesday. 

 

Meanwhile, the Dollar Index remained flat after Tuesday's gains as the US April JOLTS report showed a surprise increase in job openings, beating market expectations. The uptick in the job openings rate further supported the greenback. The dollar index, which measures the greenback against a basket of six major currencies, was down 0.03 per cent at 99.19.

 

In commodities, crude oil prices extended their gains following OPEC’s latest decision to increase supply. Brent crude price was up 0.46 per cent to $65.93 per barrel, while WTI crude prices were 0.46 per cent higher at 63.70, as of 3:44 PM IST.