Rupee extends fall as dollar revives; opens 29 paise weaker at 85.63/$

Business Standard

2 days ago

Indian Rupee extended its losses for the second day on Wednesday as the dollar index staged a recovery, after better-than-expected US consumer confidence data.
The domestic currency opened 29 paise weaker at 85.63 against the US dollar, after ending at 85.34 on Tuesday, according to Bloomberg. The currency has depreciated by 1.4 per cent in the month so far, after two straight months of gains.
Indian rupee fell yesterday before regaining composure and closing at 85.33 as exporters lined up orders to sell their receivables, which are within the costing, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Exporters should consider selling around the 85.50–85.60 level to hedge their receivables, Bhansali said. "Importers, on the other hand, may wait for the rate to fall below 85.00 before buying dollars for near-term hedging purposes." Track LIVE Stock Market Updates Here
In cues for the day, all eyes will be on India's upcoming industrial and manufacturing production data. Strong surprise data could offer further support to the rupee, but a miss could cause downside risks, according to Amit Pabari, managing director at CR Forex Advisors. Weak equity markets, muted foreign inflows, and a rebound in crude oil prices were adding pressure to the currency, Pabari said.
Meanwhile, the rise in the dollar was driven by Japan's potential cut in bond issuance, which triggered a spike in US Treasury yields. Further, the US consumer confidence rebounded sharply in May from a near five-year low, driving global investors into dollar-denominated assets.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.27 per cent at 99.79. Further, the index is down over 8 per cent so far this year on US trade policy uncertainty and fiscal worries.
However, long-term dollar weakness driven by rising fiscal deficit concerns, policy instability, rising uncertainty, and weak economic conditions is going to support the emerging markets, including the rupee, Pabari noted.
In commodities, crude oil prices advanced ahead of an OPEC+ committee meeting. Brent crude price was up 0.62 per cent to $64.49 per barrel, while WTI crude prices were 0.64 per cent higher at 61.28, as of 9:15 AM IST.