Mumbai: The Indian rupee depreciated by 10 paise to 83.50 against the US dollar in early trade on Monday, influenced by the strengthening dollar index and rising US yields.
As per reports, forex traders noted a decrease in market uncertainty following Narendra Modi's swearing-in as Prime Minister for an unprecedented third term. Despite this political stability, the strong performance of the US dollar in international markets exerted downward pressure on the rupee.
At the interbank foreign exchange market, the rupee opened at 83.48 and weakened further to trade at 83.50 against the US dollar, a decline of 10 paise from its previous closing level. On Friday, the rupee had appreciated by 13 paise to close at 83.40 against the US dollar.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, attributed the rupee's opening at 83.50 primarily to the rise in the dollar index and US yields. He emphasised that the Reserve Bank of India (RBI) is expected to intervene to protect the rupee, especially since the government’s existing policies are likely to continue with largely the same cabinet members as in Modi's second term.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, rose by 0.29 percent to 105.18. Brent crude futures, the global oil benchmark, also advanced by 0.31 percent to USD 79.87 per barrel.
On the domestic front, both benchmark equity indices, Sensex and Nifty, reached record highs in initial trading. The 30-share BSE Sensex climbed 292.08 points, or 0.38 percent, to 76,985.44, while the broader NSE Nifty traded at 23,291.50 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday, purchasing shares worth Rs 4,391.02 crore, according to exchange data.
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