Mumbai: The rupee fell 10 paise to 83.50 against the US dollar in early trade on Monday due to a rise in the dollar index and US yields. Forex traders said uncertainty among market players has eased since Narendra Modi took oath as prime minister for a record-equalling third term on Sunday. However, strength in the US currency in the international market put pressure on the local unit.
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At the interbank foreign exchange market, the local unit opened at 83.48 and declined further to trade at 83.50, registering a fall of 10 paise from its previous close. On Friday, the rupee rose 13 paise to 83.40 against the US dollar. According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, the rupee opened at 83.50 due to a rise in the dollar index and US yields. “The Reserve Bank of India (RBI) should remain present to protect the rupee, as the current policies of the government will continue in the Modi-2.0 cabinet,” Bhansali said. Modi will head a 72-member Union Council of Ministers, with an emphasis on continuity, youth and experience, as well as rewarding allies in the BJP-led National Democratic Alliance (NDA) government. Along with Modi, senior BJP leaders including Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman and S Jaishankar took oath as Cabinet ministers at Rashtrapati Bhavan, all ministers in the Modi 2.0 Cabinet. Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading 0.29 per cent higher at 105.18. Global oil benchmark Brent crude futures rose 0.31 per cent to $79.87 per barrel. In the domestic equity market, both benchmark indices, Sensex and Nifty, touched record highs in early trade. The 30-share BSE Sensex was trading 292.08 points, or 0.38 per cent, higher at 76,985.44. The broader NSE Nifty was trading at 23,291.50 points.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Friday, as they purchased shares worth Rs 4,391.02 crore, according to exchange data. Meanwhile, the RBI on Friday said India’s foreign exchange reserves rose by USD 4.837 billion to a new all-time high of USD 651.51 billion for the week ended May 31. In the previous reporting week, the overall reserves had declined by USD 2.027 billion to USD 646.673 billion.
