Share Market News / Will the rupee also make the stock market cry? FPI is becoming 'Vibhishan'

Share Market News: The Indian rupee closed 17 paise lower at 86.88 against the US dollar in the interbank foreign exchange market on Monday. The decline was mainly due to heavy withdrawal of foreign capital and improvement in the US dollar index.

Major reasons for the fall of rupee

According to foreign exchange traders, the main reason for the fall in the rupee is the increasing demand for dollar purchases by foreign banks. Also, importers are also facing difficulty in securing dollars as the rupee may weaken further in the future amid global uncertainty, increasing the risk of depreciation.

Fall after strength

The rupee started at 86.70 per dollar on this day, but during the trade the rupee touched a high of 86.68 and a low of 86.88. Finally, the rupee held its position at 86.88, which was 17 paise below the previous day's closing price. The closing price of the rupee on Friday was 86.71.

Analyst opinion

Anuj Chaudhary, research analyst at Mirae Asset Sharekhan, said that weakness in domestic markets and improvement in the US dollar index led to a decline in the Indian rupee. However, softening of crude oil prices and reduction in US bond yields limited the rupee's fall. Chaudhary further said that the decline in the domestic stock market and selling by foreign institutional investors could put pressure on the rupee. At the same time, the strength of the US dollar can also pose a challenge to the rupee. However, if the US bond yield falls further or the Reserve Bank of India intervenes, the rupee may get support at lower levels.

FPI impact

Meanwhile, the dollar index rose 0.14 per cent and was trading at 106.85. In futures trading, Brent crude prices rose 0.12 per cent to $74.83 per barrel. In the domestic stock markets, the BSE Sensex rose 57.65 points to close at 75,996.86 and the Nifty rose 30.25 points to close at 22,959.50.

According to data received from the stock markets, foreign institutional investors (FIIs) made net sales of shares worth Rs 3,937.83 crore on Monday. This also put pressure on the rupee and increased its weakness.

Conclusion

At present, the Indian rupee is looking weak against the US dollar, and the main reason for its decline is global economic instability, strength of the US dollar index and foreign capital outflows. However, softening crude oil prices and other economic indicators may help control the rupee's decline. Going forward, RBI intervention or a fall in US bond yields may support the rupee at lower levels.