Rupee Falls 19 Paise to 95.61 Against US Dollar

The Indian rupee fell 19 paise to close provisionally at 95.61 against the US dollar on Monday in Mumbai.

This decline was largely due to the rise in global crude oil prices and weakness in domestic equity markets, which put pressure on the local currency.

At the interbank foreign exchange market, the rupee opened at 95.50 and moved between 95.49 and 95.62 during the session. It finally settled at 95.61, compared with Friday’s close of 95.42.

Forex traders said the rupee may continue to trade with a slightly negative bias due to delays in a possible agreement between the United States and Iran, higher crude oil prices, and wider support for the dollar.

Brent crude, the global oil benchmark, rose 0.99 per cent to $89.40 per barrel in futures trade. Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, said weak domestic markets and higher crude prices weighed on the rupee. However, a softer dollar limited a sharper decline.

The dollar index, which measures the greenback against six major currencies, fell 0.26 per cent to 99.40.

Investor sentiment also turned cautious after the Reserve Bank of India shortened the availability of its concessional swap facility for Foreign Currency Non-Resident (Bank), or FCNR(B), deposits. The facility will now cover deposits raised only until August 31, compared with the earlier deadline of September 30.

The RBI introduced the facility to encourage foreign currency inflows. It attracted USD 56.84 billion in deposits until August 13.

Domestic equities ended lower, adding to the pressure on the rupee. The Sensex dropped 281.09 points to 77,728.16, while the Nifty declined 78.35 points to 24,287.65.

Foreign institutional investors were net buyers of Indian equities worth ₹508.12 crore on Friday, exchange data showed.

Meanwhile, India’s foreign exchange reserves jumped $14.136 billion to $707.002 billion in the week ended August 7. Reserves had increased by $10.512 billion to $692.866 billion in the previous reporting week.

The decline in the rupee's value may have significant implications for India's economy, particularly in terms of imports and exports. A weaker rupee could make imports more expensive, which may lead to higher prices for consumers. On the other hand, a weaker rupee could also make Indian exports more competitive in the global market.