Rupee falls 11 paise to close at 83.32 against U.S. dollar

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| Photo Credit: C. Venkatachalapathy

The rupee depreciated by 11 paise to 83.32 (provisional) against the U.S. dollar on January 2, amid a muted trend in domestic equities and dollar demand from importers.

Forex traders said foreign fund outflows and dollar demand from importers weighed on investor sentiments.

At the interbank foreign exchange market, the local unit opened at 83.28 and finally settled at 83.32 (provisional) against the dollar, down by 11 paise from its previous close.

On Monday, the rupee depreciated by 5 paise to 83.21 against the U.S. dollar, in the first trading session of the year 2024.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was 0.11% up at 101.44 on Tuesday.

Brent crude futures, the global oil benchmark, was trading higher by 2.13% to $78.68 per barrel.

On the domestic equity market front, Sensex declined 379.46 points, or 0.53%, to settle at 71,892.48 points. The Nifty fell 76.10 points, or 0.35%, to 21,665.80 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth ₹855.80 crore, according to exchange data.

The Indian rupee depreciated by 0.14% on weak domestic markets and a positive U.S. dollar. Surge in crude oil prices also weighed on rupee. U.S. dollar rose on safe haven appeal amid geopolitical tensions in the Red Sea and the ongoing conflict in the Middle East, according to Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas.

“We expect the rupee to trade with a negative bias on weak domestic equities and a rise in the US dollar. Surge in crude oil prices may also weigh on the domestic currency. However, any FII outflows may support rupee at lower levels,” Choudhary added.

Choudhary further noted that traders may take cues from final manufacturing PMI and construction spending data from the US. “Traders may await manufacturing index data from India and ISM manufacturing PMI and JOLTS jobs data from the US tomorrow. USD-INR spot price is expected to trade in a range of 83.10 to 83.70,” he added.

On the domestic macroeconomic front, GST collections rose 10% to about ₹1.64 lakh crore in December compared to ₹1.49 lakh crore in the same month a year ago.

During April-December 2023, gross Goods and Services Tax (GST) collection witnessed a robust 12% growth, reaching ₹14.97 lakh crore against ₹13.40 lakh crore mopped up in the same period of the previous year, the Finance Ministry said in a statement on Monday.