Rupee Resumes Slump Against US Dollar After One-Day Break

The rupee has resumed its decline against the US dollar, marking a notable shift after a brief pause. On Thursday, the exchange rate reflected a weakening of the Indian currency as it closed at 86.54 per dollar, down by 18 paise from the previous day's value of 86.36.

The dollar index, which measures the strength of the American currency against other major currencies, remained stable during the European trading session. This stability came amid a decrease in the euro and pound sterling, following disappointing economic growth data from the UK. Analysts noted that the dollar index had experienced a downward trend earlier in the week. This was driven by reports indicating that inflation in the US is beginning to ease, coupled with growing market speculation regarding potential interest rate cuts by the Federal Reserve.

Ritesh Bhanshali, director at Mecklai Financial Services, remarked that the dollar index hovered around the 109.1 mark, reflecting expectations of a shift in the Federal Reserve's monetary policy.

Market Trends

The rupee opened weaker on Thursday at a rate of 86.42 against the dollar. Additionally, crude oil prices are in focus, having risen by 0.66% to reach $82.57 a barrel during the Asia session, marking the highest prices seen since July 26. This increase in oil prices can be attributed to a recent report from the Energy Information Administration that revealed a larger-than-anticipated decline in US oil inventories.

Higher crude oil prices are significant for India as they increase import costs, which further exerts pressure on the domestic currency, the rupee.

Outlook and Recommendations

Market analysts suggest that the rupee could trade within the range of 86.35 to 86.65 against the US dollar in the near future. Exporters are encouraged to hedge their positions when the dollar rate exceeds 85.50, while importers should look to hedge below 86.40 in anticipation of fluctuations.

The depreciation of the rupee should be viewed in a broader context, taking into account various economic indicators and the performance of currencies from other economies. Understanding these factors can provide a clearer picture of the rupee's movement in the currency markets.

Rupee, Dollar, Economy