Indian Rupee Opens Lower Amid Stronger US Dollar and Rising Treasury Yields

VoM News Desk | September 26, 2023 | 10:46 AM IST | Breaking News | Follow on Google News

Indian Rupee Opens Lower Amid Stronger US Dollar and Rising Treasury Yields

Indian Rupee Opens Lower Amid Stronger US Dollar and Rising Treasury Yields

On Tuesday, the Indian rupee made its opening at 83.19 against the US dollar, reflecting a 5 paise decline. This weaker start can be attributed to the strengthening of the US dollar in international markets and the surge in US treasury yields. In comparison, the rupee had closed at 83.15 in the previous trading session.

Strong US Dollar and Soaring Treasury Yields

The US dollar exhibited remarkable sIndian Rupee Opens Lower Amid Stronger US Dollar and Rising Treasury Yieldstrength, reaching 10-month highs when measured against a basket of major global currencies. This uptrend was driven by the surging yields on US bonds, which have reached their highest levels in 16 years. The US dollar index, a measure of the dollar’s strength against a basket of currencies, reached its highest point since November, registering at 106.

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The 10-year US Treasury yield has surged beyond 4.55%, marking its highest level since October 2007. This climb is fueled by expectations that the US Federal Reserve will maintain higher interest rates for an extended period. The prospect of prolonged high interest rates has bolstered the US dollar’s appeal to investors.

Recent Rupee Performance and Influential Factors

In the previous trading session, the rupee faced headwinds, falling by 21 paise to close at 83.15 against the US dollar. Several factors contributed to this decline, including elevated crude oil prices, month-end demand for the dollar, foreign institutional investor (FII) selling, and a tepid performance in the domestic equities market. Additionally, most Asian currencies saw depreciation, with the Thai baht leading the losses with a 0.58% decline.

Market Outlook and Rupee’s Prospects

Market analysts anticipate that the USD/INR pair may gravitate toward the higher end of its consolidation range, which spans from 82.80 to 83.30. The US dollar’s strength is expected to exert upward pressure on the rupee’s exchange rate. However, some optimism stems from the potential inclusion of Indian bonds in global bond indices, which could mitigate rupee depreciation. Additionally, the anticipation of weaker economic data from the US may temper the dollar’s gains.

Crude Oil Prices and Domestic Equities

The movement of crude oil prices also played a role in influencing the rupee’s performance. Brent futures experienced a slight decline of 0.30%, settling at $93.01 per barrel, while US West Texas Intermediate (WTI) crude dipped by 0.25% to reach $89.46 per barrel. These fluctuations in oil prices had implications for the rupee’s performance.

On the domestic front, Indian benchmark equity indices, the Sensex and Nifty 50, displayed flat trading during the pre-opening session. Furthermore, the market saw FIIs net selling Indian shares worth ₹2,333.03 crore, while DIIs net purchased shares worth ₹1,579.28 crore, as indicated by provisional data available on the exchanges. These flows of foreign and domestic funds contributed to the dynamics of the rupee’s exchange rate.

VoM News Desk

VoM News is an online web portal in jammu Kashmir offers regional, National & global news.