The Indian rupee rupee today fell against the US dollar, amid volatile trade. Opening at 71.34 a dollar, the rupee traded in the range of 71.07 to 71.37 during the day. The rupee settled at 71.32 a dollar as compared to its previous close of 71.24. A sharp selloff in domestic equity markets weighed on the Indian currency while cooling oil prices supported on the downside. Oil prices extended decline today after Saudi Arabia said it would quickly restore full production following last weekend's attacks on its facilities and as US crude stockpiles rose unexpectedly.
Here are 5 things to know about USD-INR trade:
1)Weak domestic equities and continuous foreign fund outflows weighed on the domestic currency. Foreign institutional investors (FIIs), offloaded shares worth ₹959.09 crore on Wednesday. The Sensex today ended nearly 500 points lower.
2) With crude cooling off, the rupee may get some reprieve, says forex advisory firm IFA Global in a note. But with tension in the Middle East remaining elevated and outflows continuing from Indian equity markets, rupee could remain under pressure, say analysts.
3) Overnight, the US Federal Reserve cut interest rate by 25 basis points. The Fed said it would act as appropriate to ensure that the current expansion continues. "Chairman Jerome Powell indicated that balance sheet size may need to increase sooner than expected. Overall, the policy seems to support risk and is positive for emerging market assets," IFA Global added.
4) Forex traders will today focus on Bank of England's policy announcement. Analysts expect BoE to keep rates unchanged but sound dovish given the Brexit uncertainty.
5) The rupee is down about 2% so far this year, weighed down by outflows Indian equity markets over the past few months. (With Agency Inputs)