The rupee fell 20 paise to end at 83.14 (provisional) against the US dollar on Monday amid rising crude oil prices and a strengthening dollar against its major overseas rivals.
A sluggish stock market and the withdrawal of foreign funds are also weighing on the domestic currency, currency traders said.
In the interbank foreign exchange market, the local currency opened weakly at 83.04 against the US dollar and traded in a high of 83.04 and a low of 83.15.
It finally closed at 83.14 (provisional) against the US dollar, down 20 paise from the previous closing price.
The rupee gained 19 paise to settle at 82.94 paise against the US dollar on Friday.
The rupee’s gains on Friday were attributed to JPMorgan’s announcement that it will include Indian government securities in its global bond index from June 2024, a move expected to bring in $25-30 billion in inflows to the Indian debt market.
On the other hand, the dollar strengthened as importers increased demand for the greenback at the end of the month and as U.S. Treasury yields rose on concerns about further interest rate hikes by the Federal Reserve.
Anuj Choudhary, Research Analyst at BNP Paribas Sharekhan, said, “The Indian rupee fell on Monday due to a stronger dollar and weakness in domestic equities. Selling pressure from FIIs also put downward pressure on the rupee. The dollar gained amid the hawkish stance of the FOMC last week” .
He said the rupee may see slight negative impact in trading due to stronger dollar and risk aversion in global markets.
“FII outflows and rising crude oil prices are likely to put further downward pressure on the local currency. However, any intervention by the RBI is likely to support the rupee at lower levels. USD/INR spot prices are expected to trade between Rs 82.75 and Rs. 83.60,” Chaudhry said.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.08% to 105.67.
Brent crude futures, the global oil benchmark, rose 0.45% to $93.69 a barrel.
On the domestic stock market front, the BSE Sensex closed 14.54 points, or 0.02 per cent, higher at 66,023.69 points. The broader NSE Nifty closed at 19,674.55 points.
The Reserve Bank of India said on Friday that India’s foreign exchange reserves fell by US$867 million to US$593.037 billion in the week ended September 15.
Foreign institutional investors (FIIs) turned out to be net sellers in the capital market on Friday as they offloaded shares worth Rs 1,326.74 crore, according to exchange data.