Mumbai, Oct 23 The rupee depreciated for the second consecutive day and fell 12 paise to close at 94.93 against the US dollar on Friday, pressured by rising crude prices and sluggish domestic equities, with ongoing Saudi-Houthi tensions threatening to keep oil markets volatile.
Forex traders said the rupee is likely to trade with a slight negative bias on global dollar strength and Brent crude prices hovering near USD 114 per barrel.
Renewed tensions between Yemeni Houthis and Saudi Arabia may continue to impact crude oil prices, they said, adding that the US dollar index recovered while 10-year US Treasury yields slipped below the 5 per cent mark.
At the interbank foreign exchange market, the rupee opened at 94.78 against the dollar, then lost ground to touch an intra-day low of 94.98 and finally settled for the day at 94.93, registering a decline of 12 paise over its previous close.
On Thursday, the rupee slumped 43 paise to close at 94.81 against the US dollar.
“We expect the rupee to trade with a slight negative bias on elevated crude oil prices amid escalation of tensions in the Middle East and weakness in domestic markets.
“Selling FIIs may also pressurise the rupee. However, softening of US treasury yields and any fresh intervention by the RBI may support the rupee at lower levels,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
Traders may take cues from PMI data from the US and India, Choudhary said, adding that USD-INR spot price is expected to trade in a range of 94.65 to 95.25.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 101.73, higher by 0.12 per cent.
Brent crude, the global oil benchmark, was trading higher by 1.01 per cent at USD 114.31 per barrel in futures trade.
On the domestic equity market front, Sensex declined 125.56 points to settle at 73,123.83, while the Nifty dropped 87.65 points to 22,600.
Foreign Institutional Investors (FIIs) purchased equities worth Rs 887.65 crore on a net basis on Friday, according to exchange data.
Forex traders said near-term dollar liquidity has improved following the Jio IPO.
Jio Platforms’ initial public offering closed with bids for 22.19 times the shares on offer, as total demand across the public issue and anchor investor placement crossed Rs 7.4 lakh crore and applications approached a world-beating 1.39 crore.
By 7 pm on Friday, investors had bid for 438.3 crore shares against 19.75 crore shares on offer, translating into an overall subscription of 22.19 times, according to the exchange’s cumulative demand schedule.
Institutional demand was the strongest component of the offering. Qualified institutional buyers bid for 345.8 crore shares against 4.9 crore reserved, taking their category to 70.55 times subscription. Non-institutional investors subscribed 14 times their allocation, and retail individual investors bid for 2.72 times the shares reserved for them.
Meanwhile, RBI data released on Friday showed India’s forex reserves dropped by USD 5.011 billion to USD 721.016 billion during the week ended October 16. In the previous reporting week, the kitty declined by USD 8.578 billion to USD 726.027 billion.
(PTI News)
