US Dollar

At 11 a.m., the rupee was trading at 80.04, as compared to 79.86 close on the previous trading session against the US dollar. The rupee weakened to a low of 80.14 per US dollar in the first few minutes of trade on Monday as the US dollar index strengthened well past the 109 mark.

At the interbank foreign exchange market, rupee ended at 79.64, after opening strong at 79.2225 from its previous close of 79.52. The Brent crude oil prices in the international market has risen sharply and at the close of Indian market hours, it was $98.39 a barrel, up 1.02 per cent. The rupee appreciated in the early trade after the US inflation data for July came in below the estimates, raising hopes that the Federal Reserve may not be that aggressive in hiking interest rates in its next meeting.

"Some exporter flows and oil demand kept the pair steady. Speculators were on sidelines ahead of the US inflation report scheduled later in the evening. Over the near term, we expect USD-INR to remain rangebound between 79.00 and 80.00 levels on spot," said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives, at Kotak Securities Ltd.

In the morning trade, the rupee had appreciated more than 50 paise, but as soon as crude oil prices rises the gains has reduced. At the interbank foreign exchange, the rupee opened at 79.15 against the US dollar, then touched 78.94, registering a gain of 46 paise over the last close in the morning trade.

"Rupee traded very weak near 79.25 - a fall of more than 0.50 points as the dollar index rose above 106$ on back of US China geopolitical issues with regards to Taiwan. Also India's trade deficit widened to an all time high, sending signals on imbalance of trade, guiding rupee weaker to the dollar," said Jateen Trivedi, VP Research Analyst at LKP Securities.

According to Aditi Gupta, Economist at Bank of Baroda, the rupee after a record-low of 79.99/$ on July 20 has closed the fortnight stronger by 0.9 per cent. Apart from a weaker dollar, a reversal in foreign portfolio investments (FPI) outflows has also helped in supporting the rupee, Gupta said in the report.

As predicted earlier, the Indian rupee on Tuesday crossed Rs 80 for a US dollar. The fall in rupee's value is owing to multiple factors like Russia-Ukraine war, outflow of foreign institutional investors and others, said experts. Experts also said though the rupee has depreciated against the dollar, it has appreciated against other currencies.

"Rupee traded in a range between 79.80 and 79.98. As dollar index traded in a range, broadly the trend for dollar is positive till the time it is above $105... next hurdle for dollar can be seen around $110, hence rupee can be seen weak... the trend continues towards 80.50," Trivedi said. He said the Rs 79.25 mark will act as resistance for rupee and break above Rs 79.25 will trigger short covering for rupee.

Further the US 10-year yields regained the three per cent mark while commodities continued to slide lower. Providing some respite to the rupee was the fall in crude oil prices below US$100/bbl (from the week's high of US$114.8/bl) as fears of a potential global recession spurred concerns about oil demand. Further, the rupee got some support as the Reserve Bank of India (RBI) stepped in with measures to alleviate the dollar tightness.

In a research report, Kotak Securities said the dollar will touch Rs 80 in the near term. Kotak Securities said the widening trade deficit, narrowing of interest rate differentials, and Reserve Bank of India's foreign exchange intervention strategy (sell spot along with buy-sell swaps) leading to a collapse in forward premiums, led to relatively sharp depreciation in the rupee recently.