The rupee depreciated 23 paise to close at 73.25 on March 8 against the US dollar due to rising crude oil prices and the strengthening of the US currency in the overseas market, increasing its deficit for the third consecutive session.
The dollar reached a three-and-a-half-month high against a basket of six currencies globally, led by the passage of a $ 1.9 trillion stimulus package by the US Senate, positive jobs data and rising bond yields.
In the interbank foreign exchange market, the local unit opened against the greenback at 73.13 and saw an intra-day high of 73.29 and a low of 72.93.
It finally ended at 73.25 against the US currency, a decline of 23 paise at its previous close. The rupee has fallen by 8 paise to 53 paise or 0.73% in three sessions due to foreign currency outflows from capital markets mainly due to rising US bond yields.
The Indian rupee declined amid strong dollar and rise in crude oil prices. Crude oil prices rose after saudi Arabia attacked the oil facility by drones. Also, OPEC and its partners had agreed to cut most of their production, ”said Saif Mukadam, Sharekhan, a stock analyst by BNP Paribas.
However, a sharp decline on positive domestic markets can be prevented, with Mr. Mukadam saying that the rupee may trade between 72.70 and 73.50 in the next few sessions.
The Dollar Index, which estimates the strength of the greenback against a basket of six currencies, advanced 0.27% to 92.22.
Meanwhile, global oil benchmark Brent crude futures rose 0.23% to $ 69.52 a barrel.
On the domestic equity market front, the BSE Sensex rose 35.75 points or 0.07% to close at 50,441.07, while the broader NSE Nifty climbed 18.10 points or 0.12% to close at 14,956.20 points.
Foreign institutional investors were net sellers in the capital market, as they closed shares worth 6 2,014.16 crore as per exchange data on Friday.
“The US dollar has increased treasury yields in business this Monday afternoon,” said senior research analyst Sriram Iyer as concerns over rising inflation over the weekend as US Senate President President Joe Biden's $ 1.9 trillion fiscal Relief has increased after passing through the plan. ” In Reliance Securities.
Meanwhile, most Asian currencies depreciated against the dollar and weighed on sentiments, Mr. Iyer said.
Traders said they were emotional amid fears that the trade deficit could be reduced due to rising crude oil prices.
According to research analyst, Dilip Parmar, HDFC Securities is expected to trade with a negative bias in the coming days amid rising crude oil prices, higher US bond yields and the risk of outflows from domestic equities.
“Crude oil prices above $ 70 / bbl could push the current account of the country into a deficit, which has huge implications for the country's balance sheet and inflation. Higher inflation and surplus liquidity will prompt the central bank to rethink policy, ”said Mr. Parmar.
On the domestic front, market participants will monitor inflation and industrial production numbers. The rise in inflation may be slightly negative for the rupee. Motilal Oswal financial Services said that at the same time, expect IIP to continue at a steady pace, Gaurang Somaiya, forex and bullion analyst.
“Continued dollar index strength is likely to weigh on the major cross and keep both the euro and the pound under pressure. We expect USD-INR (Spot) to trade with a positive bias and bid in the range of 72.70 and 73.50, ”said Mr. Somaiya.