The rupee was trading 1 paisa higher at 86.67 against the US dollar in early trade on Monday, benefiting from a weakening greenback against other international currencies. However, the domestic currency faced pressure from a sharp decline in the equity markets, a drop in India’s forex reserves, and continuous FII outflows, restricting further gains, according to forex traders.
Starting at 86.58, up 10 paise from the previous close, the rupee gave up its initial gains to reach 86.67, just 1 paisa higher than Friday’s closing rate. On Friday, the rupee had ended 4 paise lower at 86.68 against the US dollar.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, projected that the rupee would trade in a range of 86.35-75, providing opportunities for both exporters and importers to sell and buy currencies.
The dollar index, which measures the greenback against a basket of six major currencies, was down by 0.39 percent at 106.19. Bhansali attributed this decline to the dollar losing over 3 percent from its January peak due to tariff concerns and subdued business activity in February.
In the commodity market, Brent crude oil traded flat at $74.43 per barrel in futures trade.
The domestic equity market also faced pressure, with the BSE Sensex plummeting by 567.62 points to 74,743.44 in early trade, while the Nifty dropped by 188.4 points to 22,607.50.
Foreign institutional investors (FIIs) continued to offload equities, selling shares worth ₹3,449.15 crore on a net basis on Friday. Additionally, India’s forex reserves declined by $2.54 billion to $635.721 billion in the week ending February 14, ending a three-week streak of increase.
In the previous reporting week, the reserves had increased by $7.654 billion to $638.261 billion.
