At the interbank foreign exchange, the rupee opened at 81.90 against the dollar, then fell to 81.93, against the 81.58 close in the previous trading session.
“The dollar index at a 20-year high had led to sharp depreciation in the Indian rupee over the last week. Despite that, INR has outperformed other global currencies, as RBI has been actively supporting the domestic currency by selling the US dollars,” said Aishvarya Dadheech, Fund Manager, Ambit Asset Management.
Dadheech also said that in the short term, due to global risk-off sentiment, we can expect more pressure on the Indian rupee. It will be difficult for the RBI to continue selling the US dollars aggressively any further, as the remaining forex reserves are around 9-10 months of import cover only. Most likely, RBI will have to increase repo rates (post the recent FED outcomes) to defend against further pressure on INR. Nevertheless, in the medium term, the outperformance of the Indian rupee will be supported by lower external debt (below 20 per cent as of March 2022), robust inflows (FDI+FII), a resilient economy, and adequate forex reserve ($540 billion).
The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.16 per cent to 114.235.
The Brent crude oil prices were trading at $85.26 per barrel.
Going forward, the investors are eying RBI monetary policy scheduled on Friday and the dollar index for the short-term directional trend.
Meanwhile, benchmark indices are trading marginally lower during the afternoon trade, with Sensex falling 112.02 points and Nifty by 38.30 points.
At 2.00 p.m., Sensex was trading at 56,987.85, which was down 119.67 points or 0.21 per cent, whereas Nifty was down 64.35 points or 0.38 per cent at 16,943.05.