Rupee hits four-month low on strong dollar, FPI selloff; opens at 86.83/$

Indian Rupee today: The domestic currency opened 16 paise lower at 86.83 against the dollar on Tuesday, the lowest since March 17 this year

The Indian Rupee extended its fall on Tuesday to hit a four-month low as the dollar gears up to post the best month this year amid a persistent selling of domestic equities by global funds. 

 

The domestic currency opened 16 paise lower at 86.83 against the dollar on Tuesday, the lowest since March 17 this year, according to Bloomberg. The local unit has depreciated 1.2 per cent so far this month and 1.4 per cent in this calendar year so far. 

 

Persistent dollar demand from foreign portfolio investors (FPIs) has weighed heavily on the currency, analysts said. 

 

FPIs have sold Indian equities for the sixth straight session in the secondary market, according to data from NSE. On Monday, FPIs offloaded stocks worth ₹6,082.47 crore, the biggest selloff since May 30 this year. In the last six sessions, global funds have sold stocks worth ₹19,635.38 crore in the secondary market.  

 

While there were some inflows linked to stake purchases in IDFC First Bank, these were insufficient to offset the broader sell-off, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "The rupee's opening today remains weak, and it may slide further toward the one-month low of 86.90 this week."

 

Although the Reserve Bank of India (RBI) appears to be intervening intermittently, it is allowing a gradual depreciation of the currency, Bhansali said. "Meanwhile, equities have not offered any support, with the Nifty declining consistently over the past four sessions from its peak near 25,200."

 

Meanwhile, the dollar steadied on Tuesday after climbing the most since May in the previous session on optimism over the trade deal between the US and the European Union (EU). The dollar index is poised for the best month this year, with the measure of the greenback against a basket of six major currencies, up 0.01 per cent at 98.64.

 

Equity markets in Asia edged lower while currencies remained mixed, with the week expected to be volatile with the inflation, trade, and economic data coming along with the Federal Reserve's interest rate decision. The Fed is expected to hold rates steady this Wednesday, according to Bloomberg. 

 

In commodities, crude oil prices continued their advance after the EU and the US reached a trade agreement. Brent crude price was up 0.04 per cent at 70.07 per barrel, while WTI crude prices were higher by 0.03 per cent at 66.73, as of 9:15 AM IST.