Rupee falls 4 paise to 83.05 against U.S. dollar

The rupee breached its seven-day gaining streak and depreciated 4 paise to 83.05 against the U.S. dollar in early trade on January 12 as foreign investors rushed to withdraw funds amid a sharp rise in crude oil prices.

Despite a weak American currency and surging equity markets, overall sentiment was dented after the U.S. data showed inflation increased more than expected in December, dousing hopes of an interest rate cut by the Federal Reserve soon, according to forex analysts.

They said investors will also keep a close watch on the domestic inflation numbers to be released later in the day.

At the interbank foreign exchange, the domestic currency opened weak at 83.08 and lost further ground to touch 83.10 against the greenback. The unit later traded at 83.05 against the dollar, registering a loss of 4 paise from its previous close.

The domestic currency settled 2 paise higher at 83.01 on January 11. This was the seventh straight session of rise for the local unit, during which it had added 31 paise, since the level of 83.32 versus dollar recorded on January 2.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.07% lower at 101.95 on January 12.

Brent crude futures, the global oil benchmark, surged 1.83% to $78.83 per barrel.

In the domestic equity market, the 30-share benchmark Sensex was trading 291.29 points, or 0.41%, higher at 72,012.54. The broader Nifty rose 79.55 points, or 0.37%, to 21,726.75.

Foreign institutional investors (FIIs) sold shares worth ₹865.00 crore on January 11, according to exchange data.

On the macroeconomic front, the net direct tax collection so far this fiscal rose 19.41% to ₹14.70 lakh crore, reaching about 81% of the full-year target, the income tax department said on January 11.

Reserve Bank Governor Shaktikanta Das also said on January 11 that the interim budget to be presented next month will not lead to inflationary pressures, as he said the government has already taken several measures to contain price rise.