MUMBAI, Dec 16 : The rupee depreciated by 11 paise to close at an all-time low level of 84.91 against the US dollar on Monday, dragged down by a negative trend in domestic equities.
Forex traders said the Indian rupee declined on weak domestic markets and rising US bond yields. However, a soft American currency cushioned the downside.
At the interbank foreign exchange, the rupee opened at 84.83 and touched the lowest-ever level of 84.93 against the greenback during intraday. The unit finally ended the session 11 paise down at 84.91 against the dollar.
On Friday, the rupee rebounded from its record low level and settled with a gain of 8 paise at 84.80 against the US dollar.
The unit’s previous all-time low level was recorded on December 12 when it closed at 84.88 against dollar.
“We expect the rupee to trade with a negative bias on rising odds of a rate cut by the Federal Open Market Committee (FOMC) and weak tone in the domestic markets. Elevated crude oil prices may also weigh on the rupee,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
However, FII inflows and cooling off of inflation may support the rupee at lower levels.
On the domestic macroeconomic front, wholesale price-based inflation declined to a 3-month low of 1.89 per cent in November on cheaper food items.
Retail inflation declined in November to 5.48 per cent and came within the Reserve Bank’s comfort zone mainly due to easing food prices, creating headroom for a rate cut at the central bank’s rate-setting panel meeting under new Governor Sanjay Malhotra in February.
The latest government data released on Monday showed India’s exports in November contracted by 4.85 per cent year-on-year to USD 32.11 billion, while the trade deficit widened to an all-time high of USD 37.84 billion due to record surge in gold imports. Exports had witnessed a double-digit growth in October.
Imports rose by 27 per cent year-on-year to a record USD 69.95 billion in November due to high inbound shipments of vegetable oil, fertiliser, and silver. Gold imports during the month soared to an all-time high of USD 14.8 billion as against USD 3.5 billion in November 2023.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the rupee traded weaker as the dollar strengthened.
“The rupee’s trading range is expected to remain between 84.75 and 85.00 amidst these developments,” he said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally lower by 0.14 per cent at 106.85.
Brent crude, the global oil benchmark, fell 0.78 per cent to USD 73.91 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex closed lower by 384.55 points or 0.47 per cent at 81,748.57 points. The Nifty was down 100.05 points, or 0.4 per cent, to 24,668.25 points.
Foreign Institutional Investors (FIIs) withdrew Rs 278.70 crore in the capital markets on net basis on Monday, according to exchange data.
India’s forex reserves dropped by USD 3.235 billion to USD 654.857 billion for the week ended December 6, the RBI said on Friday.
In the preceding week, the reserves had increased by USD 1.51 billion to USD 658.091 billion, ending a multi-week decline in the overall kitty. (PTI)
Follow our WhatsApp channel
