Mumbai: The Indian rupee came under renewed pressure on Thursday ending 0.51 per cent down (fall of 48 paise) to close at 96.32 per dollar, breaching the psychologically important barrier of ₹96 level on rising uncertainty in the Middle East and absence of the RBI in the forex market. It was the lowest daily closing of the rupee after July 24.
Traders and analysts pointed to a combination of factors working against the rupee including a firm dollar, elevated US Treasury yields, oil-company dollar demand and continued foreign portfolio outflows. At the interbank foreign exchange market, the rupee opened at 95.95 per dollar, made a high of 95.89 and closed at a two month low of 96.31, down 0.51 per cent compared to its previous close of 95.83 per dollar.
The Dollar Index (DXY) strengthened noticeably making a high of 101.98, after touching about 101.66 earlier, taking the index to its highest level since late June. The move reflects continued support from rising US Treasury yields, with the 10-year yield reaching around 5.35 per cent (its highest since 2002), despite softer-than-expected US inflation data reducing the immediate probability of an October Fed hike. The dollar’s resilience is also being reinforced by persistent global inflation concerns linked to elevated energy prices and Middle East tensions.
Brent crude was at $100.49/bbl, after touching an intraday high of $100.80, keeping prices close to the psychologically important $100 level. Says Dilip Parmar, research analyst at HDFC Securities, “The Indian rupee weakened in tandem with most Asian currencies as the US dollar extended its rise, supported by higher US bond yields and a rebound in crude oil prices. Risk‑averse sentiment, persistent foreign fund outflows, dollar short covering by the market participants and the central bank’s sizeable forward short‑dollar position continued to weigh on the currency.”
“In the near term, spot USD/INR is expected to trend higher, with 96.67 serving as the immediate resistance, while downside support has now shifted to 95.75,” added Parmar.
