The Indian rupee hit a fresh closing low of 83.35 against the US dollar on Monday despite a fall in the dollar index as banks bought dollars on behalf of oil companies and other importers, dealers said. The Indian currency had settled at 83.27 on Friday.
The previous all-time closing low for the rupee was 83.34 against a Dollar on November 10. The rupee had hit a record low of Rs 83.48 (intraday) against the dollar on the same day.
The dollar index, which measures the strength of the greenback against a basket of six major currencies, fell to 103.57, against 104.16 on Friday.
The dollar weakened as the markets anticipated that U.S. interest rates might have reached their highest point and have been watching closely for signs of when the Federal Reserve might start to ease monetary conditions.
“There was demand for the dollar from importers,” said Amit Pabari, managing director at CR Forex. “The RBI (Reserve Bank of India) was absent from the market today,” he added.
The local currency is expected to trade in a range of Rs 83.10 per US Dollar to Rs 83.45 a Dollar in the current week.
In November, the Indian unit has depreciated by 0.1 per cent.
In the current financial year, the rupee has depreciated by 1.4 per cent, whereas, in the current calendar year, it has depreciated by 0.7 per cent so far. However, it had appreciated by 0.16 per cent in the first six months of the current calendar year on the back of robust foreign inflows.
Meanwhile, the yield on the benchmark 10-year government bond rose by 4 basis points to settle at 7.26 per cent on Monday as mutual funds sold bonds at a profit, dealers said.
“There was selling by mutual funds as they were booking profit,” a dealer at a primary dealership said.
The 10-year benchmark yield settled at 7.22 per cent on Friday.
“There was some profit booking, and other thing is inflationary fears. The crude rose to almost $82 per barrel. Traders would have taken that into consideration,” said Dwijendra Srivastava, Executive Vice President and Chief Investment Officer Debt at Sundaram Asset Management.
Brent crude futures, the global oil benchmark, rose by 0.7 per cent to $81.14 per barrel. The rise is attributed to Saudi Arabia, the world’s largest oil exporter, planning to extend oil production cuts into the next year. Additionally, OPEC+ is contemplating further cuts in response to decreasing prices and escalating tensions related to the Israel-Hamas conflict.
The market eyes the US Federal Reserve meeting minutes scheduled to be released on Wednesday. However, the market believes that the US rate-setting panel might be done with rate hikes given the recent favourable economic data. According to the CME FedWatch tool, 99.8 per cent of traders expect the US Federal Reserve to keep the rates unchanged in December, whereas the rest of traders expect a 25 basis points hike.
