Currency Market News: Rupee slides 9 paise to 85.67 against vs US dollar

The rupee depreciated by 9 paise to 85.67 against the US dollar in early trade on Wednesday, May 21, amid a cautious global environment. Rising US Treasury yields and sustained foreign fund outflows dragged down market sentiment, pressuring the domestic unit further.

Forex traders pointed to climbing global crude oil prices as another factor exacerbating the downside pressure on the USD/INR pair. At the interbank foreign exchange market, the rupee opened at 85.65 and slipped to 85.67, down 9 paise from the previous close.

On Tuesday, the rupee had already slipped by 16 paise to settle at 85.58 against the greenback. Analysts attributed the decline to oil companies buying dollars to replenish strategic reserves amid ongoing geopolitical tensions.

“FPIs were also sellers to the extent of Rs 10,000 crore, which could be mainly on account of the Airtel Singtel deal,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Foreign institutional investors (FIIs) sold equities worth Rs 10,016.10 crore on a net basis on Tuesday, according to data from stock exchanges.

Also Read:Currency Market News: Rupee falls 21 paise to 85.63 vs US dollar 

Dollar index, Crude prices

The dollar index, which tracks the strength of the greenback against a basket of six major currencies, was trading 0.47 per cent lower at 99.65. The dip reflects concerns over the US’s fiscal stance and a weak economic outlook.

“Globally, the US 10-year yield has once again climbed the ladder, sustaining near 4.5 per cent levels, reflecting mounting concerns over fiscal indiscipline and delayed monetary easing, which is pushing up borrowing costs,” said Amit Pabari, Managing Director at CR Forex Advisors.

In the commodities market, Brent crude futures rose 1.47 per cent to $66.34 per barrel.

“Crude prices rose by more than a dollar after media reports that Israel was preparing to attack Iranian nuclear facilities, raising supply concerns out of the key Middle East producing region and bringing geo-political concerns back into the focus,” Bhansali added.

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Stock market front

Indian equities, meanwhile, opened on a positive note on Wednesday. The BSE Sensex gained 188.58 points to open at 81,375, while the NSE Nifty50 rose 32 points to 24,716. However, broader markets showed signs of weakness, especially in the smallcap space.

The Nifty Bank index edged up slightly, supported by gains in ICICI Bank, HDFC Bank and PNB.

(With inputs from PTI)