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Rupee sheds 33 paise on persistent dollar purchases by oil companies

So far this week, the domestic currency has shed 0.7% against the greenback, making it among the weakest performing Asian units over the past few days

Topics
Indian rupee | importer | Dollar

Bhaskar Dutta  |  Mumbai 



Rupee, Indian Rupee, Indian currency
FPI's have net sold $2 billion worth of Indian stocks so far in January

The rupee weakened sharply against the on Tuesday, giving up 33 paise, as relentless purchases of the American currency by importers, particularly oil companies, towards the end of the month dragged the domestic currency lower.

The rupee settled at 81.72 to the as against 81.39 on Monday.

So far this week, the domestic currency has shed 0.7 per cent against the greenback, making it one of the weakest performing Asian units over the last couple of days, traders said.

In the calendar year so far, however, the rupee has appreciated 1.2 per cent against the American unit.

Outflows of overseas investment from Indian equities also contributed to the rupee’s weakness, dealers said, adding that market sentiment was jittery ahead of key events lined up next week including the Union Budget and the US Fed’s policy statement.

have net sold $2 billion worth of Indian stocks so far in January, NSDL data showed.

“The rupee became the worst-performing currency among the Asian currencies for the second day in a row. demand from the importers and weaker domestic equities on the back of foreign fund inflows weighed on the local unit,” Dilip Parmar, research analyst, HDFC Securities said.

“USD/INR has retraced back to 100-day simple moving in the intraday... in the near term, the pair has resistance at 82.12, the 200-day simple moving average, and support at 80.95,” he said.

Apart from the flurry of dollar demand by oil importing companies, likely through state-owned banks, traders also pointed towards a global strengthening of the dollar on Tuesday as a factor behind the rupee’s slide.

“Oil companies seem to have again started buying dollars and keeping it well bid as the dollar index has crossed 102 levels; getting supported at 101.50. Brent oil was also below $ 88 to a barrel while Asian currencies weakened a bit. Rupee looks to be in a range of 81.40 to 82.10 tomorrow as the US dollar bounces back,” Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors said.

At 3:30 pm IST, the US dollar index was at 102.06 as against 101.69 at the same time on Monday. The index, which measures the US currency against six major currencies, has weakened sharply over the past couple of months due to anticipation of the Fed reducing the pace of rate hikes.

The dollar index was close to the 106 mark at the end of November 2022. However, traders were still wary to take firm bets against the dollar, given that the Fed continues to sound vigilant on inflation and interest rates in the US.

Likely purchases of the dollar by the Reserve Bank of India at lower dollar-rupee levels have also reined in the rupee’s appreciation, dealers said.


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First Published: Tue, January 24 2023. 19:00 IST

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