Amidst the bustling streets of Mumbai, the Indian rupee held steady at 83.51 (tentative) against the US dollar on Tuesday, finding equilibrium amidst a dichotomy of factors. While buoyant domestic markets and encouraging inflation metrics lent support, the pervasive strength of the US dollar and the exodus of foreign funds exerted countervailing pressures.
Currency traders observed that the rupee’s resilience is besieged by the ongoing electoral process and the relentless outflows of foreign funds, factors expected to abate post-election results.
Within the labyrinthine corridors of the interbank foreign exchange arena, the local currency navigated a narrow trajectory. Commencing at 83.51, it grazed an intraday nadir of 83.52 before settling unaltered at 83.51 (tentative) by day’s end, mirroring its prior closure. Akin to the previous day’s performance, Monday witnessed the rupee traversing within a confined range and concluding flat against the US dollar at 83.51.
Anuj Choudhary, a discerning Research Analyst at Sharekhan by BNP Paribas, prognosticated, “Anticipate a slight pessimistic tilt in rupee’s fortunes, driven by the potent US dollar and the burgeoning crude oil valuations. The persistent exodus of Foreign Institutional Investors (FIIs) may compound the rupee’s woes.”
Choudhary further opined that an upbeat sentiment in the indigenous markets might furnish a buffer to the rupee at lower echelons. Market aficionados are poised to glean insights from the Producer Price Index (PPI) data emanating from the US on Tuesday, with the Consumer Price Index (CPI) data slated for later in the week. “The USDINR spot price is anticipated to oscillate within the band of Rs 83.30 to Rs 83.80,” he added.
Concurrently, the dollar index, measuring the greenback’s prowess against a consortium of six currencies, notched up to 105.26, marking a marginal ascent of 0.04 percent. Conversely, Brent crude futures, the global vanguard of oil pricing, witnessed a marginal downtick of 0.04 percent, tapering to USD 83.33 per barrel.
On the domestic equity front, the 30-share BSE Sensex recorded an uptick of 328.48 points, translating to a nominal gain of 0.45 percent, to culminate at 73,104.61 points. Its broader counterpart, the NSE Nifty, clinched an upward trajectory, surging by 113.80 points, or 0.51 percent, to reach 22,217.85. Foreign Institutional Investors (FIIs) divulged their disposition as net sellers in the capital markets on Monday, divesting shares worth Rs 4,498.92 crore, as per exchange data.
On the macroeconomic terrain, India’s retail inflation retreated to an 11-month nadir, settling at 4.83 percent in April, spurred by a downtrend in certain kitchen staples, despite a marginal uptick in the overall food basket, as per governmental statistics released on Monday. The Consumer Price Index (CPI)-based retail inflation stood at 4.85 percent in March, juxtaposed against 4.7 percent in April 2023.