Image used for representation purposes only. | Photo Credit: Getty Images/iStockphoto
The Indian rupee weakened by 12 paise to 94.50 against the U.S. dollar in early trade on Thursday, as declines in domestic equities and higher crude oil prices outweighed support from a softer dollar and lower U.S. Treasury yields.
According to foreign exchange analysts, the rupee opened on a flat-to-lower note amid sluggish domestic stocks and rising crude oil prices. A weaker U.S. dollar and declining Treasury yields, however, limited the currency’s losses.
The rupee opened at 94.47 per dollar at the interbank foreign exchange market before slipping to 94.50, down 12 paise from its previous close.
On Wednesday, the rupee had gained 53 paise to close at 94.38 against the U.S. dollar.
“We expect the rupee to maintain a slightly positive bias, supported by foreign inflows related to the initial public offering and weakness in the dollar. Softer U.S. Treasury yields and reports that Russia is ready for renewed peace talks could provide further support,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.
Choudhary also said traders may focus on weekly U.S. unemployment claims data for further cues.
The dollar index, which measures the U.S. currency’s strength against a basket of six major currencies, was down 0.21% at 101.56.
Brent crude, the global oil benchmark, rose 1.58% to $110.54 a barrel in futures trading.
The rupee is expected to remain broadly stable within the 94-97 range, according to Anindya Banerjee, head of commodity and currency research at Kotak Neo.
“The RBI has bought itself time, while the Jio IPO has brought some near-term dollar supply. A U.S. trade agreement could also strengthen the structural inflow outlook. However, renewed portfolio selling or a decisive rise in crude prices toward $120 could put that balance under pressure,” Banerjee said.
Domestic equity markets also opened lower, with the Sensex falling 642.51 points to 73,067.18 and the Nifty declining 241.35 points to 22,570.90.
Foreign institutional investors net-bought equities worth ₹1,022.32 crore on Wednesday, according to exchange data.