Rupee falls 4 paise to close at 85.52 against U.S. dollar

The rupee falls to 85.52 against USD due to dollar demand, fund outflows, and weak equities; impacting investor sentiment

The rupee dropped 4 paise to 85.52 (provisional) against the U.S. dollar in early trade on Monday (December 30, 2024), as dollar demand from importers, foreign fund outflows and a muted trend in domestic equities dented investor sentiments.

Forex traders said the rupee witnessed heavy volatility on Friday (December 27, 2024) as well on Monday (December 30, 2024) amid significant dollar demand linked to the expiry of December currency futures and maturing positions in the outstanding forwards.

At the interbank foreign exchange, the rupee opened on a weak note and witnessed an intra-day low of 85.59 and a high of 85.43 against the American currency. The local unit settled for the day at 85.52 (provisional), registering a fall of 4 paise over its previous close.

On Friday (December 27, 2024), the rupee registered the steepest fall in almost two years to hit its lifetime intra-day low of 85.80 before a likely central bank intervention helped recover some of its losses and settled 21 paise lower at a record low of 85.48 against the U.S. dollar.

“We expect the rupee to trade with a negative bias on strength in the U.S. dollar and month-end dollar demand from importers and oil marketing companies (OMCs). Elevated crude oil prices and FII outflows may also put pressure on the local currency,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

Mr. Choudhary added, “Any intervention by the Reserve Bank of India (RBI) may support rupee at lower levels. Traders may take cues from Chicago PMI and pending home sales data from the U.S. The USD-INR spot price is expected to trade in a range of 85.30 to 85.85.” Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.07% lower at 107.92.

Brent crude, the global oil benchmark, rose 0.08% to $74.23 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex settled 450.94 points, or 0.57%, down at 78,248.13 points, while the Nifty was down 168.50 points, or 0.71%, to 23,644.90 points.

Foreign institutional investors (FIIs) offloaded ₹1,323.29 crore in the capital markets on net basis on Friday (December 27, 2024), according to exchange data.

According to the Reserve Bank of India (RBI), the country’s forex reserves dropped a further $8.478 billion to $644.391 billion for the week ended December 20. In the previous reporting week, the reserves had dropped $1.988 billion to a six-month low of $652.869 billion.

The reserves have been declining for the last few weeks, and the drop has been attributed to revaluation along with forex market interventions by RBI to help reduce volatilities in the rupee.

The forex reserves had increased to an all-time high of $704.885 billion in end-September.

Published - December 30, 2024 04:53 pm IST