The Indian rupee slipped 12 paise to close at 86.52 against the US dollar on Friday. This drop came as a result of weak stock markets, rising global crude oil prices, and continued foreign investor withdrawals.
At the interbank foreign exchange market, the rupee opened at 86.59, touched a low of 86.63, and finally settled at 86.52, compared to Thursday’s close of 86.40.
Why Did the Rupee Fall?
According to Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, the fall in the rupee was mainly because:
- Crude oil prices went up
- Indian stock markets weakened
- Foreign Institutional Investors (FIIs) pulled out their investments
- Uncertainty over the US-India trade deal due on August 1
- Geopolitical tensions between Thailand and Cambodia
Choudhary added that the rupee might remain under slight pressure and is likely to trade between 86.30 and 86.90 per dollar for now. Traders are also waiting for:
- US durable goods orders data
- Monetary policy updates from the US Federal Reserve and the Bank of Japan
Global Factors at Play
- The US dollar index (which shows how strong the dollar is compared to six other currencies) rose by 0.33% to 97.44, boosted by strong US job data.
- Brent crude oil prices also went up 0.42% to $69.47 per barrel, as global trade talks showed positive signs.
Trade Deal Uncertainty
Experts say that if the India-US trade deal gets delayed or fails, it could hurt Indian exporters and put more pressure on the rupee. However, any breakthrough in the talks might help the currency recover.
Stock Market Drops
- Sensex fell by 721.08 points (0.88%) to 81,463.09
- Nifty dropped by 225.10 points (0.90%) to 24,837
- FIIs sold shares worth ₹1,979.96 crore, which added to the market decline
Forex Reserves Dip
The Reserve Bank of India reported that the country’s foreign exchange reserves fell by $1.183 billion to $695.489 billion for the week ending July 18.
Also See: India’s Forex Reserves Drop $1.18B to $695.49B; Gold Rises by $150M
