Indian rupee appreciates to 84.03 vs US dollar as crude prices fall

The Indian rupee mildly appreciated on Tuesday, and closed at 84.03 against the US dollar, as falling crude oil prices balanced out some pressure from the local currency due to portfolio outflows from Indian stocks and bonds. The Reserve Bank of India was also likely present, and did not allow the rupee to go past the 84.08/$1 mark, dealers said.

The currency appreciated to 84.03/$1, after closing at 84.05/$1 in the previous session. The currency had also touched a record intra day low on 83.075/$1 on Monday, according to LSEG data.

“The RBI has been protecting the 84.08/$1 mark since the past two days. Since the rupee had already touched the 84.15/$1 mark in the offshore market, that is the level to watch out for”, said a currency dealer at a state run bank.

The RBIs stated position is that it does not target particular levels for the rupee, and intervenes in the market to reign in excess volatility in the rupee exchange rate.

Brent crude oil prices declined by 5% to $73.5 per barrel as concerns of supply being disrupted eased, after Israel said in a report that it is not willing to strike Iranian oil rigs, according to Reuters.

A fall in crude oil prices is beneficial for India’s economy and its trade deficit, as India is a major importer for the commodity.On Tuesday, Indian stocks saw outflows of Rs. 1,748 crores from foreign investors, according to BSE data. In October, FPIs drained almost $8 billion from Indian stocks and bonds, according to NSDL data, a sharp contrast from the $11.1 billion FPI inflows seen in September.