Rupee's Movement and Currency Market Dynamics
The rupee experienced a significant decline, nearing the 87-mark, reflecting broader overseas disinterest in Indian risk assets compared to robust performances in other Asian markets.
Factors Influencing the Rupee's Decline
- Dollar Demand: Importers' demand for dollars increased, adding pressure to the rupee.
- Overseas Investors: There was a net sale of over ₹28,000 crore in the cash market by foreign investors, despite $500 million of provisional buying on Tuesday.
- US Tariffs: Potential trade impacts due to higher US tariffs also affected the rupee.
Market Reactions and Interventions
- The rupee opened at 86.9050 and weakened to 86.9875.
- The Reserve Bank of India intervened to prevent the currency from breaching the 87 level.
- The closing rate was ₹86.95 against the dollar, about 1% weaker compared to the previous day's close.
Investor and Currency Trends
- Foreign Institutional Investors (FIIs) sold local stocks worth ₹3,938 crore on a net basis recently.
- In February, overseas investors were net buyers for only 2 out of 14 trading sessions.
- The dollar index, which had previously hit a high of 110, rose 0.35% to 106.95, indicating the US currency's strength.