Rupee weakened and US dollar reached at its highest level in six months

Weakened by a rise in crude oil prices and a strong US dollar on Wednesday, the rupee lost 10 paisas. Finished the day at a record low versus the US dollar of 83.14 (provisional).

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The US dollar reached its highest levels in six months on Wednesday, according to currency traders, which caused the Indian rupee to weaken. Additionally, the rupee suffered from rising crude oil prices.

The local currency in the interbank foreign exchange market started the day at 83.08 against the US dollar and fluctuated in the day trade between 83.02 and 83.18.

In the end, the rupee lost 10 paise to close at 83.14 (provisional) against the US dollar. The rupee fell 33 paise on Tuesday, ending the day at 83.04 against the US dollar.

The dollar index, which measures the strength of the dollar against a basket of six different currencies, decreased slightly by 0.07 percent to 104.73. The international oil benchmark, Brent crude futures, saw a 0.67 percent fall to USD 89.44 per barrel.

Risk aversion on international markets

The USD 90/barrel threshold was broken by Brent crude. Anuj Choudhary, a research analyst at Sharekhan by BNP Paribas, reported that the US dollar increased on safe-haven demand amid worries about the worldwide economic downturn.  As after China's Caixin Services PMI fell to an 8-month low of 51.8 in August vs. a projection of 53.6.

Choudhary added that they anticipate a negative bias in the rupee's trading due to risk aversion on international markets and a strong US dollar.

Rising crude oil prices could further weaken Rupee

FII withdrawals and rising crude oil prices could put additional pressure on the rupee. However, the rupee may be supported at lower levels by any RBI intervention and the anticipation of no rate move by the Fed in its September FOMC meeting. The US ISM services PMI statistics may serve as a guide for traders.

The 30-share BSE Sensex closed at 65,880.52 up 100.26 points, or 0.15 percent, on the domestic equity market front. The NSE Nifty index as a whole increased by 36.15 points or 0.18 percent to 19,611.05.

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