Rupee Declines 3 Paise to 84.83 Against US Dollar in Early Trade

In early trading on Monday, the Indian rupee witnessed a decrease of 3 paise, settling at 84.83 against the US dollar. This drop is attributed to a lackluster performance in domestic stock markets and high crude oil prices.

Forex analysts pointed out that the rupee is under pressure as importers and foreign banks continue to demand more dollars. When the interbank foreign exchange market opened, the rupee was recorded at 84.83 per dollar, indicating a decline of 3 paise compared to the previous trading session.

On the prior Friday, the rupee had managed to bounce back from its all-time low, closing stronger by 8 paise at 84.80 against the dollar. Despite this recent recovery, the rupee has seen downward pressure over the past week following the Reserve Bank of India's announcement regarding a transition in leadership.

The Reserve Bank is closely monitoring liquidity within the banking system and has implemented a buy-sell swap to bolster the rupee's value amidst ongoing market challenges.

Furthermore, the return of Foreign Institutional Investors (FIIs) as net buyers in December could provide additional stability to the rupee, as these investors had previously pulled out substantial funds from the market. Reports show that FIIs had net purchases of ₹2,335.32 crore within the capital markets on Friday, supporting the rupee's position.

Compounding these challenges, the dollar index, which measures the strength of the US dollar against a selection of six other currencies, fell by 0.13 percent, trading at 106.86. Additionally, Brent crude oil prices eased slightly, dropping 0.34 percent to USD 74.24 per barrel in futures trading.

In the domestic equity space, the 30-share BSE Sensex was down by 78.29 points, or 0.10 percent, trading at 82,054.83 points in the morning session. Similarly, the Nifty 50 index faced a decline of 15.45 points, or 0.06 percent, standing at 24,752.85 points.

Moreover, a recent report from the RBI indicated that India's foreign exchange reserves decreased by USD 3.235 billion, bringing the total to USD 654.857 billion for the week ending December 6. This followed an increase of USD 1.51 billion the previous week, which had marked an end to a series of declines in the reserves.

Rupee, Dollar, Forex