The Indian rupee faced a setback, depreciating by 4 paise to 83.36 against the US dollar (22.71 against UAE dirham) during the morning session on Thursday.
This decline was attributed to the robust performance of the American currency in the global market and a subdued trend in equities.
Factors Influencing the Rupee Movement:
Forex traders observed that the rupee is navigating within a narrow range, influenced by a delicate balance between the supportive impact of decreasing crude oil prices and the heightened demand for the dollar from importers.
Initiating the day at 83.36 against the dollar, the South Asian currency experienced a 4-paise drop from its previous close at the interbank foreign exchange.
Equities Inflow Amidst Forex Fluctuations:
Simultaneously, data from the National Securities Depository revealed that Indian equities witnessed inflows exceeding $3 billion in December, adding complexity to the currency’s trajectory.
Despite a temporary relief for the rupee on the preceding day, analysts are cautious about the sustainability of this improvement. External factors such as ongoing selloffs in oil and substantial financial inflows contribute to the uncertainty.
Support and Resistance Levels:
Forex traders remain attentive to key support and resistance levels, noting that the USD/INR pair is between 83.20 and 83.40.
Global market indicators reveal a pullback in US equities and a marginal dip in futures on the S&P 500 Index in the Asian markets.
Notable declines in Japan and Hong Kong are evident, with the Korean won and the Indonesian rupiah leading the descent in Asia’s foreign exchange markets.
Dollar Index and US Economic Data Impact:
Despite softer-than-expected US economic data, the dollar index exhibited strength for the third consecutive day, prompting a decline in US bond yields.
The 10-year US Treasury yield dropped to 4.10 percent following lower-than-anticipated growth in private payrolls.
