Rupee weakens by 6 paise to reach 82.62 against the US dollar in early trade on Tuesday. The fall in rupee was due to a stronger dollar and mixed global cues, according to traders. However, the declining crude oil prices, firm Asian currencies and positive sentiment in the domestic equity market helped in capping the fall. The dollar index rose by 0.07%, and the global oil benchmark Brent crude futures fell 1.08% to USD 72.99 per barrel. On the other hand, the BSE Sensex rose by 0.35% and the NSE Nifty was up by 0.30%. Investors were trading cautiously and awaited the interest rate decision by the US Federal Reserve on Wednesday.
As per Anand James, Chief Market Strategist at Geojit Financial Services, “We are back into a sideways band with a mild downside bias with 82.24 as support, but expect upsides to gain momentum if 82.81 is reclaimed.”
Foreign Institutional Investors (FIIs) were net sellers in the domestic capital market on Monday as they offloaded shares worth Rs 2,545.87 crore, according to exchange data. This indicates their cautious approach towards the Indian market.
The fall in the rupee’s value against the dollar is likely to affect India’s import and export bills. It could also have an impact on the current account deficit of the country. The government and the Reserve Bank of India (RBI) might have to take appropriate measures to stabilise the rupee’s value and ensure that it does not depreciate further. The RBI might have to intervene in the foreign exchange market to stabilise the currency. Investors will be closely watching the US Federal Reserve’s interest rate decision as it could affect the strength of the dollar and the rupee’s value.