Rupee falls for second straight day amid likely outflows; opens at 85.75/$

Business Standard

2 days ago

Indian Rupee opened lower for the second straight day on Tuesday amid renewed foreign outflows and a recovery in the dollar index.
The domestic currency opened 16 paise lower at 85.75 against the greenback, after closing at 85.59 on Tuesday, according to Bloomberg. The currency has depreciated by 0.56 per cent so far this week.
The Indian Rupee depreciated on Tuesday after a brief spell of range-bound trading, driven by a stronger dollar and renewed foreign institutional investor (FII) outflows from equities, according to Amit Pabari, managing director at CR Forex Advisors. Global funds have been on a selling spree in domestic equities for the last three sessions.
The Reserve Bank of India (RBI) remains well-positioned to step in, with a comfortable reserve buffer of $693 billion, limiting the scope for any sharp rupee depreciation, he said. "Additionally, robust domestic bond issuances are supporting the rupee."
The rupee is expected to open flat today, with near-term weakness likely, Bhansali said. Market participants are closely watching the RBI's actions around the 85.70 level, which it has been defending in recent days, he added.
The Dollar Index rose on Tuesday after the US April JOLTS report showed a surprise increase in job openings, beating market expectations. The uptick in the job openings rate further supported the greenback. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.01 per cent at 99.21.
India's Services and Composite PMI will be the key data scheduled for release today. The dollar-rupee pair is expected to trade within a range, with strong resistance near 86.00–86.20 levels and immediate support around 85.00–85.20 levels, Pabari noted.
All eyes will be on the RBI's six-member monetary policy committee (MPC), which will begin its meeting today and is expected to cut the repo rate by 25 basis points (bps) to 5.75 per cent. The committee is scheduled to announce its policy review on Friday.
In commodities, crude oil prices traded lower after a two-day rise following OPEC's latest decision to increase supply. Brent crude price was down 0.32 per cent to $65.42 per barrel, while WTI crude prices were 0.36 per cent lower at 63.18, as of 09:08 AM IST.