The Indian rupee depreciated six paise to 81.77 against the US dollar in early trade on Monday, tracking a lacklustre trend in the Indian equity markets and a firm American currency overseas.
However, lower crude prices in the international market and fresh foreign fund inflows restrict the rupee’s fall, forex dealers say.
At the Indian interbank foreign exchange, the rupee opened weak at 81.81 against the dollar, then gained some ground to quote 81.77, registering a decline of six paise over its previous close.
In the previous session on Friday, the rupee weakened by just one paisa to end at 81.71 against the dollar.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.41 per cent to 106.39.
Brent crude futures, the global oil benchmark, declined 2.58 per cent to $81.47 per barrel.
The thirty share BSE Sensex was trading 27.97 points or 0.04 per cent lower at 62,265.67 in the Indian equity market. Similarly, the broader NSE Nifty fell 12.45 points or 0.07 per cent to 18,500.30.
“Markets could be seen trading lower in early trades Monday in view of weak Asian cues and resurgent safe-haven demand for the US dollar in the backdrop of China’s increasing covid cases. Due to persisting lockdowns in the dragon country, demand has been slowing, resulting in recessionary fears in key global economies,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.
“However, the positive takeaway is that the Covid concerns are offset by the optimism of more support from the Chinese central bank. While intra-day volatility would persist, some positive catalysts such as falling crude oil prices, US dollar index, and better than expected earnings season could keep the markets in good stead,” he added.
According to exchange data, Foreign Institutional Investors were net buyers in the Indian capital markets on Friday as they bought shares worth Rs3.69 billion.
Foreign portfolio investors have rediscovered their liking for Indian equities, making a net investment of Rs 31,630 crore in November in hopes of an end to the aggressive rate hikes and positivity about overall macroeconomic trend.
