Rupee Falls 30 Paise to 95.94 Against US Dollar in Early Trade
Mumbai: The rupee fell 30 points to 95.94 on Friday after hitting new lows in three consecutive sessions as rising crude oil prices, a strong dollar and concerns over the West Asian crisis weighed on investor sentiment. Forex traders said the USDINR was under pressure and hovering very close to the 96 level as dollar buying continued amid the rise in oil prices.
Moreover, the fact that the summit between US President Trump and Chinese President Xi did not yield positive results, especially on the US-Iran front, further damaged investors’ confidence.
The USD/INR pair, which fell to 95.96 against the American currency on Thursday, rebounded sharply after reports emerged that India was considering a major cut in taxes paid by foreign investors on Indian bonds.
The government on Friday increased the prices of petrol and diesel by Rs 3 per litre, in the latest move to reduce demand for these fuels.
In the interbank foreign exchange market, after opening at 95.86, the rupee fell to 95.94 against the dollar, down 30 paise from the previous close.
The rupee fell to a new record low of 95.96 against the US dollar on Thursday before closing at 95.64 with a marginal gain of 2 paise.
Meanwhile, the dollar index, which measures the strength of the dollar against a basket of six currencies, was traded at 99.05 with an increase of 0.24 percent.
Global oil reference Brent crude oil is trading at $107.09 per barrel, up 1.30 percent in futures.
In the domestic equity market, Sensex rose 239.14 points to 75,637.86 in early trade, while Nifty was trading 78.30 points higher at 23,767.90.
“The Dollar Index rose for the fourth consecutive session after strong US retail sales and stable labor market data dampened expectations for aggressive interest rate cuts by the Federal Reserve,” said CR Forex Advisors MD – Amit Pabari.
Another layer of uncertainty for the rupee was the closely watched meeting between US President Donald Trump and Chinese President Xi Jinping. While both sides try to maintain stability, disagreements over Taiwan and China’s continued purchase of oil from Iran have kept geopolitical concerns alive.
“And when uncertainty increases globally, the dollar often becomes the market’s preferred safe haven. For now, the rupee is caught between policy support at home and global pressure from oil, inflation and the dollar abroad,” Pabari said. he added.
Foreign Institutional Investors turned into net buyers by buying shares worth Rs 187.46 billion on Thursday, stock exchange data showed.
Meanwhile, the government on Thursday imposed a 100 kg limit on gold imports under the Prior Authorization programme, which allows jewelery exporters to import raw or input materials at zero duty.
The government has tightened conditions for pre-authorizing and monitoring gold imports. Previously, there were no restrictions on gold imports under the program.
The Prior Authorization program allows inputs included in an export product to be imported duty-free. In addition to all kinds of inputs consumed or used in the production of export products, packaging materials, fuel, oil and catalysts are also allowed.
