Indian Rupee Declines to 88.71 Against US Dollar as Oil Prices Rise

Mumbai: The Indian rupee depreciated by 6 paise, closing at 88.71 (provisional) against the US dollar during a subdued trading session on Monday. The decline was primarily influenced by the ongoing rise in crude oil prices.

Despite this setback, positive performance in domestic equity markets and a weaker US dollar helped to mitigate the rupee's losses, according to foreign exchange traders.

In the interbank foreign exchange market, the rupee commenced trading at 88.64 against the American currency. Throughout the day, it reached an intraday high of 88.64 and a low of 88.71.

Ultimately, the domestic currency settled at 88.71 (provisional), reflecting a decrease of 6 paise compared to its previous closing rate. On the preceding Friday, the rupee had also lost ground, slipping by 2 paise to 88.65 against the US dollar.

Anuj Choudhary, a Research Analyst at Mirae Asset ShareKhan, stated, "We expect the rupee to trade with a slight negative bias on rising global markets and a surge in crude oil prices. Importers' demand for the US dollar may also put pressure on the rupee. However, any weakening of the US dollar amid concerns over the long-term health of the US economy may support the rupee at lower levels. Markets may remain volatile as the US Government shutdown nears an end. USD/INR spot price is expected to trade in a range of 88.50 to 89."

In other economic indicators, the dollar index, which measures the strength of the US dollar against a basket of six other currencies, fell by 0.04 per cent to 99.55.

Brent crude oil, the global benchmark, increased by 1.01 per cent, trading at $64.27 per barrel in futures markets.

On the equity front, the Bombay Stock Exchange's Sensex rose by 319.07 points, closing at 83,535.35, while the National Stock Exchange's Nifty gained 82.05 points to reach 25,574.35.

Foreign institutional investors contributed significantly to the equity markets, purchasing shares worth ₹4,581.34 crore on Friday, as reported by exchange data.

Additionally, the Reserve Bank of India disclosed that India's foreign exchange reserves fell by $5.623 billion to $689.733 billion for the week ending October 31. This decline is part of a broader trend, with overall reserves decreasing by $6.925 billion to $695.355 billion.