Mumbai
The Indian rupee continued to hover at the previous day’s record low of 83.34 against the US dollar in morning trade on Tuesday, despite a weakened dollar index. The dollar index fell to 103.20, its lowest level in two-and-a-half months. However, the rupee failed to recover as expected due to importers, including oil companies, buying more dollars as a hedge to capitalize on the low price. While other Asian currencies gained from the decline in the US dollar, the rupee faced challenges. Traders noted that the increase in crude oil prices and foreign funds flowing out of stock markets contributed to the rupee’s weakness. On Monday, Brent crude futures, the global oil benchmark, rose 0.66% to USD 81.14 per barrel. The rupee had recorded a 7 paise decline to settle at 83.34 against the US dollar on the same day. Despite the weakened dollar index, the rupee’s stability can be attributed to factors such as oil companies increasing dollar purchases as a hedge. Foreign institutional investors (FIIs) were net sellers in the capital markets on Friday, selling shares worth Rs 477.76 crore. India’s foreign exchange reserves also decreased by USD 462 million to USD 590.321 billion for the week ended November 10, according to the latest RBI data. This decline in reserves limits the RBI’s intervention capacity to support the rupee in case of further depreciation.
