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Indian Rupee opens flat at 85.65/$ as weak Dollar caps decline
The Indian Rupee opened flat on Wednesday, a day after it snapped two days of gains, as the weakness in the dollar index capped heavy depreciation in the currency.
The domestic currency depreciated 1 paise to open at 85.65 after closing at 85.64 against the greenback on Tuesday, according to Bloomberg data. The currency has fallen by over 1.3 per cent so far this month.
The local unit fell on Tuesday as oil companies bought dollars and a stocks selloff by global funds, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. Foreign portfolio investors (FPIs) sold equities worth over ₹10,000 crore in the cash market, the highest in over three months. Track LIVE Stock Market Updates Here
Meanwhile, the US Dollar Index showed signs of weakness as it once again fell below the 100 mark. The index, which measures the greenback against a basket of six major currencies, was trading 0.44 per cent lower at 99.67. The fall in the index boosted Asian currencies, which rose between 0.1 per cent and 0.4 per cent.
The decline in the index comes after Federal Reserve officials had a cautious tone on the US economic outlook. According to reports, St. Louis Fed President Alberto Musalem cautioned that the US labour market may weaken and prices could rise, a concern echoed by Atlanta Fed President Raphael Bostic. The 10-year treasury yield climbed back to the 4.50 per cent level, while short-maturity yields were broadly unchanged.
On the geopolitical front, tensions escalated after reports emerged that Israel is preparing for a potential strike on Iranian nuclear facilities. Following this news, Brent crude price was up 1.48 per cent to $66.35 per barrel, while WTI crude prices were 0.21 per cent lower at 62.56, as of 9:15 AM IST.
Firm global crude oil prices intensified the downside pressure on the currency, according to Amit Pabari, managing director at CR Forex Advisors. The latest geopolitical developments may cause a tick-up in oil prices, which can cause the rupee to be in pressure, he said.
Technically, the dollar-rupee pair is expected to face strong resistance near 85.60-85.80 levels while 85.20 will act as a strong support, Pabari said.
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