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Rupee drops to three-week low as dollar strengthens, FPIs limit fall
'In line with its Asian counterparts, the Indian rupee weakened against the US dollar. The dollar's rally was fuelled by President Trump's statement that he does not intend to fire Federal Reserve Chairman Jerome Powell. Even with significant dollar inflows into the primary market, the rupee followed the regional trend, closing at 86.08,' said Dilip Parmar, Senior Research Analyst at HDFC Securities.
The dollar index gained 0.4 per cent to reach 98.7, reversing earlier losses after President Donald Trump addressed speculation about the future of Federal Reserve Chair Jerome Powell. The greenback had initially weakened amid concerns that Trump might attempt to remove Powell, but rebounded once the President downplayed the likelihood of such a move, calling it 'highly unlikely'.
The dollar index measures the strength of the greenback against a basket of six major currencies.
'The Indian rupee was in a range of 85.79 to 86.1025 as there were inflows from the QIP of Reliance Power, while outflows from certain IPOs (Anthem Bio Sciences was subscribed 63 times, so a good-sized outflow has happened) kept it in a range. FPIs and oil companies continued to remain dollar buyers amid uncertainties in the world markets and trade deal negotiations also not getting finalised,' said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
'FPIs bought strongly between 85.97 and 86.1025, with the market caught short. The strong dollar index kept the rupee weak, while the fall in Asian currencies also did not help as the rupee continued to depreciate towards 86 levels,' he added.
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