Kolkata: The downward pressure on Indian rupee continued on Friday, Nov 21, with the INR trading at 88.63 against the US dollar, pulled down by a strong dollar and FII capital flows. Though the rupee showed a slight recovery this morning by 5 paise, thanks to lower crude prices and FII flows into domestic stocks, the situation seems to have changed during the course of the day with the equity markets sinking into the red. Around 3 pm, Sensex 30 was more than 380 points, or 0.45% down while Nifty 50 was about 120 points or 0.46% down.
On Thursday, Nov 20, the rupee went down 20 paise to close at 88.68 against the US dollar. The SU dollar was seen strengthening in the dollar index, which measures the strength of the American currency against a basket of six currencies. It was 0.01% at 100.09. The currencies in the dollar index are the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. In case the dollar index goes up, it indicates that the greenback is becoming strog in comparison to those six major currencies of the world.
Intra-day low of 88.74
On Nov 21, at the interbank foreign exchange market, the rupee opened at 88.63, then lost further ground, touching an intra-day low of 88.74, said reports. The rise in the dollar index was observed after minutes of the meeting by FOMC of the US Fed revealed that most officials on the rate-setting committee of the US central bank did not want a rate cut in December.
The downward pressure on the rupee increased as FIIs were suspected to be selling Indian equities on Friday. On Thursday, when the Indian market indices rose, Foreign institutional investors invested Rs 283.65 crore in the secondary market on a net basis, revealed exchange data.
Growth flat in eight core sectors
On Nov 20, data released by the government showed that growth in eight key infrastructure sectors — coal, crude oil, natural gas, petroleum refinery products, electricity, fertiliser and steel — in October remained flat on a year-on-year basis. Though output of petroleum refinery products, fertiliser and steel rose, it was neutralised by a shrinkage in electricity generation and coal production.
“We expect the rupee to trade with a slight negative bias on a rising dollar and declining odds of a rate cut by the US Federal Reserve in its December Federal Open Market Committee (FOMC) meeting…. We may see the RBI intervening as the rupee inches towards record low levels. Traders may also take cues from the non-farm payrolls report. USD-INR spot price is expected to trade in a range of 88.40 to 89,” Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan wa quoted in the media as saying.