Mumbai: The rupee depreciated 12 paise to 81.97 against the US dollar in early trade Monday, weighed down by firm crude oil prices and a negative trend in domestic equities.
Forex traders said the strengthening of the American currency in the overseas market also weighed on the local unit.
At the interbank foreign exchange, the domestic unit opened at 81.90 against the dollar, then fell to 81.97, registering a decline of 12 paise over its last close.
On Thursday, the rupee settled at 81.85 against the dollar.
Domestic forex and equity markets were closed Friday on account of Ambedkar Jayanti.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.15 per cent to 101.70.
Brent crude futures, the global oil benchmark, advanced 0.08 per cent to USD 86.38 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 740.8 points or 1.23 per cent lower at 59,690.20. The broader NSE Nifty declined 187.50 points or 1.05 per cent to 17,640.50.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets Thursday as they purchased shares worth Rs 221.85 crore, according to exchange data.
Traders said factors like global market sentiment, quarterly earnings, crude oil prices, movement in US DXY & other FX currencies and lastly RBI’s action will dictate terms for the domestic currency.
Meanwhile, India’s forex reserves increased by USD 6.306 billion to USD 584.755 billion for the week ended April 7, the RBI said Friday.
“…RBI has always piled up their FX reserves and forward book whenever the pair has tested multi-week or month lows. So, as long as RBI keeps on buying on dips and holds the 81.50 level, one can expect a reversal move towards 82.30-82.50 over the short-term,” CR Forex Advisors MD-Amit Pabari said.
