MUMBAI, Dec 3: The rupee bounced back from its record low and ended the day with a modest gain of 3 paise, settling at 84.69 (provisional) against the US dollar in a range-bound session on Tuesday, supported by a positive trend in the domestic stock markets.
Forex traders noted that the rupee has been experiencing a declining trend primarily due to Donald Trump’s comments regarding BRICS currency, political uncertainties in the Eurozone, lackluster domestic economic indicators, and ongoing foreign portfolio investments outflows.
US President-elect Trump warned on Saturday about a potential 100 percent tariff on BRICS nations if they take steps to undermine the US dollar.
Additionally, market participants are eagerly awaiting insights from the Reserve Bank of India’s monetary policy meeting scheduled for December 6, which is expected to focus on balancing inflation with growth.
In the interbank foreign exchange market, the rupee started at 84.75 and traded within a narrow band, reaching an intraday high of 84.64 and an all-time low of 84.76 against the US dollar.
On the previous day, the rupee fell by 12 paise, closing at a record low of 84.72 against the dollar.
Meanwhile, the dollar index, which measures the US dollar’s strength against a basket of six currencies, dropped by 0.18 percent to 106.25.
Brent crude, the global oil standard, increased by 1.11 percent to USD 72.63 per barrel in futures trading.
In Parliament on Monday, Minister of State for Finance Pankaj Chaudhary stated that the rupee is among the best-performing Asian currencies despite geopolitical tensions in the Middle East and other challenges, showcasing India’s robust economic fundamentals.
He highlighted that one significant factor contributing to the depreciation of the INR is the widespread strength of the US dollar.
“During the calendar year 2024, the Dollar Index has risen by approximately 4.8 percent as of November 19, 2024. Recently, on November 22, the Dollar Index peaked at 108.07, its highest point in over a year, putting pressure on emerging market currencies,” he mentioned.
Moreover, tensions in the Middle East and uncertainties surrounding the results of the US elections have further complicated the situation.
While currency depreciation may improve export competitiveness, thereby benefiting the economy, it can also lead to increased costs for imported goods.
He added that the RBI keeps a close watch on global developments that could impact the USD-INR exchange rate.
On the domestic stock market front, the benchmark 30-share index Sensex ended up 597.67 points, or 0.74 percent, reaching 80,845.75. The Nifty also rose by 181.10 points, or 0.75 percent, closing at 24,457.15.
Traders indicated that ongoing selling pressure from foreign funds has added to the strain on the currency. According to exchange data, Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday, offloading shares worth Rs 238.28 crore. (PTI)
