Indian Rupee Drops 11 Paise to 90.43 Against US Dollar
The Indian rupee fell by 11 paise on Wednesday, closing at 90.43 (provisional) against the US dollar. This decline follows a strong rally in the previous session triggered by the announcement of a trade deal between India and the US. Analysts suggest the dip was caused by local companies and importers buying more dollars.
Rupee Performance and Market Volatility
The rupee started the day at 90.35 at the interbank foreign exchange. During the session, it reached a high of 90.26 and a low of 90.54 before finally settling at 90.43. This is an 11-paise drop from Tuesday’s closing price.
Just a day earlier, the rupee was the best-performing currency in Asia. On Tuesday, it saw a record gain of 117 paise (1.28%), ending at 90.32 after news of the India-US trade deal broke.
Factors Impacting the Currency
While the trade deal created positive feelings in the market, traders remain cautious. This is because a formal agreement has not yet been signed, and the final documentation has not been released.
Several other factors influenced the rupee’s movement on Wednesday:
- India-US Trade Deal: Investors are waiting for more specific details about the deal’s terms.
- Crude Oil Prices: A sudden rise in oil prices overnight limited the rupee’s potential gains.
- Economic Data: A weaker-than-expected services PMI report also put pressure on the domestic currency.
Anuj Choudhary, a Research Analyst at Mirae Asset ShareKhan, noted that while the trade deal and foreign investments might support the rupee, high oil prices and tensions between the US and Iran could keep gains in check. He expects the USD-INR spot price to stay between 90.00 and 90.60.
Global Oil and Dollar Trends
The dollar index, which measures the US dollar against six major currencies, dropped slightly by 0.03% to 97.40. Meanwhile, Brent crude oil fell by 0.10% to $67.26 per barrel. Experts from Kotak Securities highlighted that oil prices remain unstable due to global tensions and shifts in the commodity markets.
Domestic Equities and Economic Growth
The Indian stock market showed modest gains on Wednesday. The Sensex rose by 78.56 points to reach 83,817.69, while the Nifty climbed 48.45 points to 25,776. Data also showed that foreign investors bought shares worth over Rs 5,236 crore on Tuesday.
On the economic front, India’s services sector showed strength. The HSBC India Services PMI rose to 58.5 in January, a two-month high. This growth was driven by high demand, new business, and technology investments, leading many service providers to hire more staff.
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