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The rupee dropped 9 paise to 85.61 against the U.S. dollar in early trade on Tuesday (December 31, 2024), weighed down by significant strengthening of the American currency in the overseas market and a muted trend in domestic equities.
Forex traders said the rupee has been under continued pressure amid the Federal Reserve’s cautious stance and the “Trump factor” driving up the dollar index (DXY) and US 10-year yields.
Additionally, on the domestic front, slowing growth, widening trade deficit, and persistent foreign fund outflows have further fueled the rupee’s depreciation.
At the interbank foreign exchange, the rupee opened on a weak note at 85.54 then fell further to 85.61 against the American currency, registering a fall of 9 paise over its previous close, on month-end dollar demand from importers and oil marketing companies.
On Monday (December 30, 2024), the rupee dropped 4 paise to 85.52 against the U.S. dollar.
According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, the US Dollar stood tall in 2024 and recorded strong gains against most currencies, as investors braced for fewer US rate cuts and the incoming Trump administration’s policies.
“It would be posting strong gains in 2024 against most currencies and its gains have been buoyed by rising treasury yields, a falling yen and European currencies,” Mr. Bhansali said.
Mr. Bhansali further added that rupee is expected to remain volatile with Tuesday (December 31, 2024) being the last day of roll-over of positions.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.14% down at 107.97.
Brent crude, the global oil benchmark, was up 0.50% at $74.36 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex was trading 548.90 points or 0.70% down at 77,699.23 points in morning trade, while Nifty was down 138.90 points or 0.59% to 23,506.00 points.
Foreign Institutional Investors (FIIs) offloaded ₹1,893.16 crore in the capital markets on a net basis on Monday (December 30, 2024), according to exchange data.
On the domestic macroeconomic front, India’s current account deficit (CAD) moderated marginally to $11.2 billion or 1.2% of GDP year-on-year in the July-September quarter of 2024-25, according to Reserve Bank data released on Friday (December 27, 2024).
The CAD, an indicator of the country’s external payment scenario, was $11.3 billion or 1.3% of GDP during the second quarter of 2023-24.
Published – December 31, 2024 10:44 am IST