The rupee ended the day at 86.33 against the US dollar on Monday, depreciating by 11 paise due to strong dollar demand and a subdued trend in domestic equities, according to forex traders. The Indian rupee had shown gains on Friday but started lower on Monday amidst uncertainty surrounding ‘Trump Tariffs’ and continued foreign fund outflows.
Traders mentioned that the upcoming Union Budget will have a significant impact on market sentiment and the rupee’s trajectory, with hopes for favorable measures to boost foreign investments. The rupee opened at 86.35 against the dollar, reaching a high of 86.33 and a low of 86.45 during the day before settling at 86.33 (provisional), down by 11 paise from the previous close.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that factors such as positive US dollar movements and a weak domestic market could lead to a negative bias for the rupee. However, interventions by the central bank and lower crude oil prices might offer support. Investors are also cautious ahead of the Federal Open Market Committee (FOMC) meeting outcome this week.
Meanwhile, the US dollar index was trading slightly higher at 107.48. The US government announced a pause on sanctions and tariffs on Colombia after the country agreed to accept all terms set by President Trump.
In the commodity market, Brent crude futures rose to USD 78.65 per barrel. On the domestic front, the Sensex and Nifty closed lower by 1.08% and 1.14% respectively. Foreign Institutional Investors (FIIs) sold off ₹2,758.49 crore in capital markets on Friday.
In terms of forex reserves, India saw a decrease of $1.88 billion to $623.983 billion in the week ended January 17, as reported by the Reserve Bank of India. This followed a previous decline of $8.714 billion to $625.871 billion in the week ended January 10.
