The rupee recovered somewhat from its all-time low and appreciated 10 paise to close at 85.03 (provisional) against the US dollar on Friday, following a weakening in the US dollar index and a possible intervention by the Reserve Bank of India ( RBI). .
Forex traders said the rupee is likely to remain in a weakening mode due to significant demand for the dollar. The Dollar Index (DXY) is expected to remain elevated, with resistance around the 110 level in the near term, while the likelihood of significant Fed rate cuts in 2025 decreases.
The Federal Reserve cut rates by 25 basis points on Wednesday, but its expectations for 2025 have been softened, with expectations cut from four rate cuts to just two.
At the interbank foreign exchange market, the rupee opened at 85.07 against the dollar. During the day, the price witnessed an intraday high of 84.95 and a low of 85.12 before ending the session at 85.03 (provisional) against the dollar, 10 paise higher than the previous close.
On Thursday, the rupee depreciated 19 paise and crossed the crucial level of 85 to close at a fresh all-time low of 85.13 against the US dollar.
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Traders said the rupee recovered from lower levels in the second half of the day after a weakening in the US dollar index and a possible intervention by the Reserve Bank of India (RBI). A fall in crude oil prices also supported the rupee at lower levels.
“We expect the rupee to trade with a negative impact on weak domestic markets and overall US dollar strength amid a hawkish Fed and an improving US economy,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.
Choudhary further added that FII outflows could also weigh on the rupee. However, any RBI intervention or further correction in crude oil prices could support the rupee at lower levels.
“Traders can rely on the main PCE price index, personal spending and revised US consumer sentiment data. The USD-INR spot price is expected to fluctuate within a range of 84.80 to 85.15,” he said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.14 percent lower at 108.26.
Brent crude, the global oil benchmark, fell 0.99 percent to $72.16 per barrel in futures trading.
In the domestic equity market, the 30-share BSE Sensex closed 1,176.46 points (or 1.49 percent) lower at 78,041.59 points, while Nifty fell 340.10 points (or 1.42 percent) to 23,611.60 points.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Thursday as they sold shares worth Rs 4,224.92 crore, according to exchange data.
