The Indian rupee depreciated 9 paise to 94.50 against the US dollar in early trade on Friday, November 6, as the strengthening American currency in overseas markets weighed on investor sentiment.
Forex traders said overnight gains in crude oil prices and a recovery in the US dollar put pressure on the domestic currency. The rupee opened at 94.50 against the US dollar at the interbank foreign exchange market, registering a decline of 9 paise from its previous close.
However, during initial trade, the domestic currency recovered slightly to touch a high of 94.36 against the greenback. On Thursday, the rupee had settled at 94.41 against the US dollar.
Dollar index and crude oil prices
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six major currencies, was trading 0.17 per cent higher at 101.71.
Brent crude, the global oil benchmark, was trading 2.04 per cent higher at USD 100.30 per barrel in futures trade. Rising crude oil prices remain a concern for the Indian currency as India depends heavily on imports to meet its energy requirements.
The Bank of England kept its policy rates unchanged, while US weekly unemployment claims came in better than market forecasts, further supporting the American currency, according to market analysts.
What experts say about the rupee
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee is expected to trade with a positive bias, supported by strength in domestic markets and fresh foreign institutional investor (FII) inflows.
However, geopolitical tensions between Ukraine and Russia, along with attacks in the Middle East, could limit significant gains in the domestic currency.
Sensex and Nifty trade mixed
On the domestic equity market front, benchmark indices witnessed mixed trends in early trade. The Sensex rose 33 points to 79,343.06, while the Nifty declined 52.95 points to 24,477.40.
Meanwhile, foreign institutional investors (FIIs) remained net buyers on Thursday, purchasing equities worth Rs 14,974.68 crore, according to exchange data.
Market participants will continue to track movements in the US dollar, crude oil prices, foreign fund flows and global geopolitical developments for further cues on the rupee’s trajectory.