Mumbai, Oct 22: The rupee depreciated 12 paise to 94.50 against the US dollar in early trade on Thursday, weighed down by weak domestic markets and elevated crude oil prices.
According to forex analysts, the rupee began trading on a flat-to-lower trajectory due to sluggish domestic equities and surging crude oil prices. However, the downside remained cushioned by a softer US dollar and declining US Treasury yields.
At the interbank foreign exchange market, the rupee opened at 94.47, then lost ground to touch 94.50, lower by 12 paise over its previous close.
On Wednesday, the rupee surged 53 paise to close at 94.38 against the US dollar.
“We expect the rupee to trade with a slight positive bias on IPO related foreign inflows and weakness in the dollar. Softening of US treasury yields and reports that Russia is ready for new peace talks may also support the rupee,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
Choudhary further added that traders may take cues from weekly unemployment claims data from the US.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.21 per cent at 101.56.
Brent crude, the global oil benchmark, was trading higher by 1.58 per cent at USD 110.54 per barrel in futures trade.
The rupee remains finely balanced within 94-97, said Anindya Banerjee, Head of Commodity and Currency Research, Kotak NEO.
“The RBI has bought itself time, the Jio IPO has added near-term dollar supply, and a US trade agreement could strengthen the structural inflow story. But if portfolio selling accelerates again or crude makes a decisive move towards USD 120, that balance will be tested,” Banerjee added.
On the domestic equity market front, Sensex fell 642.51 points to 73,067.18 in early trade, while Nifty declined 241.35 points to 22,570.90.
Foreign Institutional Investors (FIIs) purchased equities worth Rs 1,022.32 crore on a net basis on Wednesday, according to exchange data. ( PTI )
