Unabated FII outflows weigh on Re

Mumbai: The rupee declined 4 paise to 82.88 (provisional) against the US dollar on Friday, weighed down by unabated foreign fund outflows and a negative trend in domestic equities.

Forex traders said elevated American currency overseas and crude oil prices in the international market also dented investors' sentiments. At the interbank foreign exchange market, the local unit opened at 82.95 and touched the intra-day low of 82.96 and a high of 82.85 against the greenback. The local unit finally settled at 82.88 (provisional) against the dollar, registering a loss of 4 paise from its previous close. On Thursday, the rupee depreciated 3 paise to settle at 82.84 against the US dollar. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent lower at 103.31 on hotter-than-expected inflation data from the US. Brent crude futures, the global oil benchmark, declined 0.50 per cent to $84.99 per barrel.

“We expect the rupee to trade with a slight negative bias on the strong dollar and weak global markets amid declining odds of a rate cut by the Fed in June. However, some softening of crude oil prices at higher levels may support the rupee,” said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas. Choudhary further added that any selling of US dollar by the RBI may also support the rupee at lower levels. Traders may take cues from India's trade balance data. They may also take cues from Empire State Manufacturing Index, industrial production data from US, Choudhary said, adding that “USD/INR spot price is expected to trade in a range of Rs82.70 to Rs83.10”.