The Indian Rupee weakened against the American dollar in early trade on Friday, tracking the greenback’s strength overseas and persistent foreign fund outflows.
At the interbank foreign exchange, the rupee opened at 79.20 against the dollar, then lost ground to quote at 79.25 — a decline of 12 paise from previous close. The exchange rate stood at 79.13 on Thursday.
The dollar index, which gauges the American currency’s strength against a basket of six currencies, was trading 0.05% lower at 107.07.
“As the dollar index rises towards 107 and with crude up above $100 per barrel, it does not seem that we will get lower levels on the USD-INR pair,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors. “In any case, the flows will not follow immediately after the announcement of measures and positive market sentiments. The RBI could take more non-conventional steps to stabilise the rupee.”
Brent crude futures rose 0.17% to $104.83 per barrel.
The Reserve Bank of India had on Wednesday raised overseas borrowing limits for companies and liberalised the norms for foreign investments in government bonds, as part of its efforts to boost forex inflows and protect the rupee.
The central bank is closely monitoring the liquidity conditions in the forex market and has stepped in as needed in all its segments to alleviate dollar tightness with the objective of ensuring orderly market functioning.
The minutes of the U.S. Federal Reserve meeting held last month indicated a hawkish stance. A rate hike of 75 basis points is likely in July. The minutes were released on Wednesday.