Indian rupee weakens 21 paise to 85.60 against the US dollar due to a firm American currency and foreign fund outflows. RBI's monetary policy announce
Indian rupee weakens 21 paise to 85.60 against the US dollar due to a firm American currency and foreign fund outflows. RBI’s monetary policy announcement awaited.
According to forex traders, the local unit remained under pressure tracking negative domestic equity markets amid geopolitical uncertainties. Investors are also awaiting cues from the Reserve Bank’s monetary policy announcements.
RBI’s Monetary Policy Committee (MPC) will begin deliberations on its bi-monthly policy on Wednesday and the outcome is scheduled to be announced on June 6.
At the interbank foreign exchange, the domestic unit opened at 85.55 and moved between the high of 85.44 and a low of 85.60 against the greenback during the day. The unit closed the session at 85.60 (provisional) against the dollar, registering a loss of 21 paise from its previous close.
On Monday, the rupee appreciated 16 paise to settle at 85.39 against the dollar.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee weakened against the dollar on weak domestic equities and FII outflows.
“Trade tensions between US and China and renewed geopolitical tensions between Ukraine and Russia may also weigh on the domestic unit. Traders may take cues from job openings and factory orders data from the US,” Choudhary said, adding, “USD-INR spot price is expected to trade in a range of 85.20 to 85.90.”
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.25 per cent at 98.95.
Analysts said the US dollar index lost some ground after ISM manufacturing PMI fell more than expected, but recovered soon as China’s manufacturing PMI showed slower-than-expected growth in that country.
Brent crude, the global oil benchmark, fell 0.12 per cent to USD 64.55 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex tanked 636.24 points, or 0.78 per cent, to close at 80,737.51, while the Nifty declined 174.10 points, or 0.70 per cent, to 24,542.50.
Foreign institutional investors (FIIs) sold equities worth Rs 2,589.47 crore on a net basis on Monday, according to exchange data.
A monthly survey released on Monday showed India’s manufacturing sector growth fell to a three-month low in May, restricted by inflationary pressures, softer demand and heightened geopolitical conditions.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 58.2 in April to 57.6 in May, highlighting the weakest improvement in operating conditions since February.
money.rediff.com