Daijiworld Media Network – Mumbai
Mumbai, Jul 6: The rupee depreciated by 10 paise to 95.28 against the US dollar in early trade on Monday, weighed down by the strength of the American currency in overseas markets and persistent geopolitical uncertainties.
At the interbank foreign exchange market, the domestic currency opened at 95.25 against the dollar before slipping further to 95.28, compared with its previous close of 95.18 on Friday.
Forex traders said the Reserve Bank of India (RBI) is expected to utilise fresh foreign capital inflows to rebuild its foreign exchange reserves rather than allowing the rupee to appreciate significantly.
Market participants also cited uncertainty surrounding the progress of US-Iran peace negotiations, which has kept a geopolitical risk premium in global financial markets.
Commenting on the currency movement, CR Forex Advisors Managing Director Amit Pabari said the rupee's inability to strengthen despite favourable factors such as lower crude oil prices and a softer US dollar reflected underlying market fragility.
He said any fresh negative developments could push the USD-INR exchange rate towards the 95.80-96.00 range, while support is expected around 94.80-95.00.
Meanwhile, the US dollar index, which measures the greenback against a basket of six major currencies, was trading 0.10 per cent higher at 100.95.
Brent crude, the global oil benchmark, declined 0.58 per cent to USD 71.70 per barrel in futures trade.
Domestic equity markets opened on a positive note, with the Sensex rising 281.40 points to 78,051.03 and the Nifty gaining 74.60 points to 24,347.05 in early trade.
Foreign institutional investors remained net buyers on Friday, purchasing equities worth Rs 1,355.33 crore, according to exchange data.
The RBI on Friday reported that India's foreign exchange reserves declined by USD 5.654 billion to USD 666.933 billion during the week ended Jun. 26.
In the previous week, the reserves had increased by USD 963 million to USD 672.587 billion. The country's forex reserves had touched a record high of USD 728.494 billion during the week ended Feb. 27 before declining amid the West Asia conflict, when the RBI intervened in the foreign exchange market through dollar sales to support the rupee.