Indian rupee fell 5 paise to trade at 83.22 against the US dollar: Checkout the reasons!

Early on Thursday, the Indian rupee fell 5 paise to trade at 83.22 against the US dollar after negative signals from the country's equities markets and persistent inflows of foreign cash. In contrast to its previous finish of 83.17, the local currency opened flat at 83.18.

On Thursday, the dollar index, which measures the strength of the US dollar relative to a basket of six other currencies, was down 0.10% at 102.31.

A declining greenback index supported the local currency as worries about disruptions to international trade via the Red Sea route grew, according to forex brokers.

Given the weakening of the US dollar, the drop in US Treasury rates throughout the curve, and the softening of crude oil prices, the rupee is expected to strengthen today. The dollar is weakening ahead of data on the core PCE price index, which is expected on Friday.

This data would offer new insights on inflation and the likely direction of Fed policy. Investors are pricing in a roughly 150 basis point rate drop over 2024, according to the CME FedWatch tool. However, FII withdrawals and risk aversion in international markets could limit the rupee's significant gains, according to a note from ICICI Direct.

As long as the USDINR remains below the 83.30 level, it is predicted to decline towards the 83.05 level. Benchmark Brent crude fell 0.49% to $79.31 a barrel in the global oil market.

The local stock market continued to fall on Thursday, mirroring the losses of its international counterparts.

The Nifty 50 fell 12.60 points, or 0.06%, to 21,137.55, while the Sensex was trading 75.20 points, or 0.11%, lower at 70,431.11.

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According to provisional data available on the exchanges, on Wednesday, foreign institutional investors (FIIs) net-sold Indian shares worth Rs. 1,322.08 crores, while domestic institutional investors (DIIs) net-bought shares worth Rs. 4,754.34 crores.

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