Rupee Falls 7 Paise to 85.83 Against US Dollar in Early Trade

The decline in the value if rupee close to 85.83 per dollar (a decrease of 7 paise) in early trade on Monday indicated a clear disarray and cautiousness towards the global and domestic market fluctuations.

Dealers attribute the trend to a higher US dollar index, which remained firm on speculation that the Federal Reserve might slow down interest rate cuts. Domestically, however, the equity markets opened lower, further weakening the Indian currency.

Both the Sensex and Nifty opened in the red, following weak global trends. Also weighing on investor confidence are continued foreign capital outflows and high crude oil prices.

Forex traders noted that geopolitical tensions and uncertainty around key economic data in the US and India have added to volatility. “The rupee’s trajectory in the near term will depend largely on external pressures and RBI’s stance on liquidity,” said a Mumbai-based currency analyst.

On Friday, the rupee closed at 85.76 per dollar. The Reserve Bank of India (RBI) has till now not intervened actively in the currency market, indicating a wait-and-watch strategy ahead of its next monetary policy announcement.
In the near term, market players are looking for critical points of data, such as US inflation numbers and local industrial output, which may shape both bond and currency markets.

Even with the present decline, experts feel the rupee could stabilize if there is a decrease in global risk and the RBI gives forward guidance in its policy announcement.

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