Rupee Remains Steady at 85.04 Against the US Dollar

In early trading on Monday, the Indian rupee opened at 85.02 against the US dollar but soon settled flat at 85.04, which was the same level as the previous session's closing. This stability came as the rupee struggled to recover from its record low, impacted by a strengthening dollar and continuous foreign fund outflows.

Forex traders noted that the rupee's weakness was primarily due to strong demand for the dollar, exacerbated by rising crude oil prices linked to ongoing geopolitical tensions. Despite some positive momentum in the domestic equity markets, which offered slight support to the rupee, the overall sentiment remained weak.

The market anticipates that the dollar index will likely stay elevated in the near term. This is fueled by concerns over potential delays in interest rate cuts by the US Federal Reserve anticipated for 2025. On Friday, the dollar index, which reflects the dollar's strength against six major currencies, showed an increase of 0.13 percent to reach 107.49.

Regarding crude oil, Brent crude futures saw a 0.47 percent rise, trading at $73.28 per barrel, adding pressure on the rupee due to the implications of higher oil prices for India’s import bill.

On the equity market side, the 30-share benchmark index, Sensex, was performing well, up by 543.48 points (0.70 percent) at 78,585.07 points, while the Nifty index rose by 186.10 points (0.79 percent) to reach 23,773.60 points.

However, foreign institutional investors (FIIs) were selling off shares last Friday, with net sales amounting to ₹3,597.82 crore. This trend of selling reflects investor caution regarding capital markets.

Recent data from the Reserve Bank of India (RBI) indicated that India's foreign exchange reserves have dropped by $1.988 billion, bringing the total down to $652.869 billion for the week ending December 13. This follows a previous decline of $3.235 billion reported in the week before.

Rupee, Dollar, Market