Rupee Experiences High Volatility Against US Dollar in Early Trade

On Wednesday morning, the rupee was marked by intense fluctuations in its trading against the US dollar. The positive momentum from domestic equities was overshadowed by considerable pressures from global economic uncertainties, leading investors to adopt a more cautious approach.

Forex traders highlighted that the continued uncertainty surrounding the global economy has been detrimental to both currencies and commodities. This situation has kept investors on their toes, resulting in notable volatility in the market.

At the interbank foreign exchange market, the rupee opened at 86.56 against the dollar but quickly fell to a low of 86.71 during a turbulent morning session.

In the previous session, the rupee had already faced challenges, declining by 13 paise to close at 86.58 against the US dollar.

Meanwhile, the dollar index, which measures the strength of the US dollar against a selection of six major currencies, was trading slightly higher, up by 0.07 percent, at 108.13. In tandem, Brent crude, the international oil benchmark, saw a minor increase of 0.09 percent, reaching USD 79.36 per barrel.

Back home, the Indian markets were feeling the strain from global uncertainties, compounded by a significant sell-off by foreign investors, who offloaded more than USD 7 billion worth of shares this month. According to Amit Pabari, the Managing Director of CR Forex Advisors, this external pressure has negatively impacted the rupee as well as the Indian markets.

Despite the current challenges, there are some positive indicators on the horizon. Pabari noted that improved budget allocations and a potential reduction in crude oil prices could lend some crucial support to the rupee. However, with the Union Budget approaching, market volatility is expected to persist as traders proceed with caution.

Looking forward, forecasts suggest that the USD/INR pair may trade within a range of 86.20 to 86.80, reflecting the ongoing global uncertainties and a generally cautious market sentiment.

On the domestic front, equity markets opened positively, with the 30-share index, Sensex, starting at a gain of 224.31 points or 0.30 percent, trading at 76,062.67. Similarly, the Nifty index recorded an increase, rising by 37.70 points or 0.16 percent to reach 23,062.35.

Additionally, Foreign Institutional Investors (FIIs) were net sellers in the equity markets on Tuesday, having sold shares worth Rs 5,920.28 crore as indicated by exchange data.

Rupee, Dollar, Volatility