Rupee Slips 5 Paise to 83.01 Against US Dollar in Early Trade

In early trade on Friday, the Indian rupee depreciated by 5 paise to 83.01 against the US dollar. This decline was attributed to the strength of the American currency and elevated crude oil prices in the international market. Forex traders noted that a negative trend in domestic equities and foreign fund outflows also contributed to dampened investor sentiments.

At the interbank foreign exchange, the rupee opened at 82.96 against the dollar, reaching an early low of 83.01 and a high of 82.95 in initial trade. The previous day, the rupee had settled at 82.96 against the US dollar after the Reserve Bank of India (RBI) opted to maintain the key policy rate unchanged for the sixth consecutive time, aiming to keep a tight vigil on inflation.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented on the RBI's decision, noting that the central bank's decision to maintain the status quo and provide no forward guidance on rate cuts prompted a decline in equity markets.

The RBI's monetary policy committee (MPC) decided to keep the repo rate unchanged at 6.5 percent, aligning with market expectations. The central bank also revised its GDP projections for fiscal year 2024 to 7.3 percent from 7 percent and projected GDP for fiscal year 2025 at 7 percent. Additionally, it forecasted consumer price-based inflation (CPI) for fiscal year 2025 at 4.5 percent.

Meanwhile, the dollar index, which measures the strength of the US dollar against a basket of six currencies, was marginally higher at 104.19. Brent crude futures, the global oil benchmark, experienced a slight decrease of 0.04 percent to USD 81.60 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading slightly lower by 41.59 points or 0.06 percent at 71,386.84 points. Similarly, the broader NSE Nifty declined by 30.25 points or 0.14 percent to 21,687.70 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, offloading shares worth Rs 4,933.78 crore, according to exchange data.

(With Agency Inputs)