Indian Rupee Declines by 6 Paise Against US Dollar

On September 13, the Indian rupee faced a depreciation of 6 paise, closing at 83.01 against the US dollar. This decline was attributed to factors such as a surge in global crude oil prices and the strength of the US dollar in international markets. Despite these challenges, positive developments in domestic markets and encouraging macroeconomic data from India helped mitigate the rupee's decline, according to forex traders.

At the interbank foreign exchange market, the rupee began trading at 82.92 against the US dollar, fluctuating within a range of 82.89 and 83.01 throughout the day. Ultimately, it settled at 83.01, marking a 6 paise drop compared to its previous closing rate of 82.95 on the preceding Tuesday.

Anuj Choudhary, a Research Analyst at Sharekhan by BNP Paribas, explained that the rupee's depreciation was primarily influenced by the robust performance of the US dollar and the rise in global crude oil prices. However, the positive performance of domestic markets and optimistic macroeconomic data from India provided some support for the Indian currency.

Expectations of a potential interest rate hike by the US Federal Reserve further bolstered the US dollar's position. Looking ahead, analysts anticipated that the rupee might continue to face some downward pressure due to the strengthening US dollar and the volatility in crude oil prices. Additionally, global market risk aversion could weigh on the rupee's performance. Nevertheless, positive sentiment in domestic markets was expected to offer some resilience at lower levels.

The dollar index, which measures the US dollar's strength against a basket of six major currencies, saw a slight increase of 0.08 percent, reaching 104.79. Meanwhile, Brent crude futures, the global benchmark for oil prices, rose by 0.58 percent, reaching USD 92.59 per barrel.

In the short term, the USD/INR spot price had resistance at 83.15 and support at 82.80. The overall bias remained bullish for the pair as long as it held above the 82.70 level, according to Dilip Parmar, a Research Analyst at HDFC Securities.

On the domestic front, India's key stock indices performed well, with the 30-share BSE Sensex closing 245.86 points or 0.37 percent higher at 67,466.99, while the broader NSE Nifty reached a record closing high of 20,070.00, advancing by 76.80 points or 0.38 percent.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on that day, offloading shares worth Rs 1,631.63 crore, according to exchange data.

Additionally, India's industrial production growth in July reached a five-month high of 5.7 percent, driven by robust performance in manufacturing, mining, and power sectors, as per official data released earlier. Retail inflation declined to 6.83 percent in August after hitting a 15-month high of 7.44 percent in July, primarily due to easing vegetable prices, but it remained above the Reserve Bank's comfort zone.