Rupee Drops 7 Paise to 84.73 Against the US Dollar

Post by : Elena Malik

Photo : Pixabay

The Indian rupee became weaker on Monday, falling by 7 paise to trade at 84.73 against the US dollar. This happened because foreign investors took money out of India, and the stock markets in India were not performing well. This drop followed a small gain last Friday when the rupee went up by 5 paise to close at 84.66.

At the start of trading, the rupee opened at 84.70 and then slipped to 84.73. Experts say that the demand for US dollars from importers and foreign banks is putting pressure on the rupee. Businesses need dollars to buy goods from other countries, and foreign banks are buying more dollars, reducing their availability in India. This causes the rupee to lose value compared to the dollar.

Amit Pabari, an expert from CR Forex Advisors, explained that everyone is now waiting for important economic data like the Industrial Production (IIP) and Consumer Price Index (CPI) reports. These numbers are important because they will show how India’s economy is doing after the recent decisions made by the Reserve Bank of India (RBI).

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Last week, the RBI decided not to change interest rates, but it reduced the Cash Reserve Ratio (CRR) by 50 basis points. This means banks can now keep less money with the RBI and have more money to lend to businesses and people. This move is aimed at helping the slowing economy and provided some support to the rupee.

Pabari also mentioned that new IPOs (Initial Public Offerings) are expected to bring in fresh money from investors. This could help the rupee remain steady. He believes that the rupee will trade in a range between 84.50 and 85 in the near future, with limited chances of a big drop.

Globally, the US dollar is getting stronger. The dollar index, which shows the strength of the US dollar compared to other major currencies, rose by 0.08% to 106.14. At the same time, crude oil prices also went up slightly to $106.15 per barrel. Since India imports most of its oil, higher oil prices add more pressure on the rupee.

In the stock market, the situation wasn’t very positive. The BSE Sensex dropped by 76.29 points to 81,632.83, and the Nifty index fell by 24.20 points to 24,653.60 during the morning trade. Foreign investors also sold shares worth ₹1,830.31 crore last Friday, which made the situation worse for the stock market and the rupee.

On a brighter note, India’s forex reserves increased by $1.51 billion last week, reaching $658.091 billion. This was good news after the previous week’s drop of $1.31 billion. These reserves are important because they help India deal with currency changes and other financial challenges.

Experts say that while the rupee is under pressure because of global and local issues, the RBI’s actions and the expected inflow of money from IPOs might help it stay stable. The coming days will be crucial to see how these factors affect the rupee and India’s economy.

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