Rupee declines by 50 paise to 81.28 on dollar demand
Mumbai: The rupee depreciated by 50 paise to close at 81.28 against the US currency on Monday due to strong dollar demand from corporates and oil companies and a firm dollar in the overseas markets.
A muted trend in domestic equities and rising crude oil prices also weighed on investor sentiment, forex traders said.
At the interbank foreign exchange market, the local unit opened on a strong note at 80.53, but pared gains and finally settled at 81.28 against the American currency, registering a fall of 50 paise over its last close. On Friday, the rupee appreciated by 62 paise to close at 80.78 against the dollar.
India's industrial production expanded by 3.1 per cent in September, boosted by manufacturing, mining and power sectors, according to official data released on Friday.
Asian currencies mostly weakened after a two-day rally, even as the Chinese yuan rallied 0.6 per cent on reports of policy support for the country's battered property sector, Iyer said.
In the overseas markets, the dollar rallied, while the US Treasury yields also rose on Monday afternoon trade amid fading expectations of a less aggressive Federal Reserve interest rate hike after Governor Christopher Waller said the central bank was not softening its fight against inflation, Iyer added.
Official data released on Monday showed that retail inflation moderated to 6.7 per cent in October while the wholesale price index fell to a 19-month low mainly on account of subdued rates of food items.
The fall in consumer price index-based retail inflation to 6.77 per cent in October from 7.41 per cent in September has also brought some relief for the Reserve Bank which has been struggling to bring it below the upper tolerance level of 6 per cent since January this year.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.59 per cent to 106.91.
Global oil benchmark Brent crude futures declined 0.63 per cent to $95.93 per barrel.
On the domestic equity market front, the 30-share BSE Sensex fell 170.89 points or 0.28 per cent to end at 61,624.15, while the broader NSE Nifty declined 20.55 points or 0.11 per cent to 18,329.15.
Foreign Institutional Investors (FIIs) were net buyers in capital markets as they purchased shares worth Rs 3,958.23 crore on Friday, according to exchange data.
On the domestic macroeconomic front, the wholesale price-based inflation declined to a 19-month low of 8.39 per cent in October, on easing prices of fuel and manufactured
items.
