Rupee falls 41 paise to close at 81.93 against US dollar

Mumbai, Jan 31 (PTI) The rupee depreciated by 41 paise to close at 81.93 (provisional) against the US dollar on Tuesday after the Economic Survey 2022-23 said the domestic unit may remain under pressure on account of plateauing of exports and subsequent widening of current account deficit.

Forex traders said significant foreign fund outflows and a muted trend in domestic equities also dented investor sentiment.

At the interbank foreign exchange, the domestic unit opened weak at 81.61 against the dollar, and lost further ground to fall below the 82 per US dollar level. The rupee finally ended at 81.93, registering a decline of 41 paise over its last close.

During the session, the local unit witnessed an intra-day high of 81.58 and a low of 82.07 against the US dollar. In the previous session on Monday, the rupee settled at 81.52 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced 0.15 per cent to 102.43.

Brent crude futures, the global oil benchmark, declined 1.18 per cent to USD 83.90 per barrel.

Forex traders said investors are bracing for interest rate decisions from the Federal Reserve, and the Union Budget for 2023-24, both scheduled to be announced on Wednesday.

The Indian rupee may remain under depreciation pressure on account of plateauing of exports and subsequent widening of the current account deficit, the Economic Survey said.

The country’s current account deficit (CAD) widened to 4.4 per cent of the GDP in the quarter ended September from 2.2 per cent in April-June due to higher trade gap, as per latest data of the Reserve Bank of India.

According to the survey, while commodity prices have retreated from record highs, they are still above the “pre-conflict” (Russia-Ukraine war) levels.

Strong domestic demand amid high commodity prices will raise India’s total import bill and contribute to unfavourable developments in the current account balance, it said.

“These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure,” said the key document released a day before presentation of Union Budget 2023-24.

In the domestic equity market, the 30-share BSE Sensex was trading 49.49 points or 0.08 per cent higher at 59,549.90. The broader NSE Nifty advanced 13.20 points or 0.07 per cent to 17,662.15.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 6,792.80 crore, according to exchange data.