By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee fell on Monday as a slight recovery in the U.S. dollar and strong dollar demand from local companies blunted positive cues that boosted equity indexes to record highs.
The rupee closed at 83.3650 against the U.S. dollar, weaker by 0.09% compared to its close at 83.2875 in the previous session.
While the rupee opened higher at 83.26, the gain faded as local corporates rushed to pick up dollars, a foreign exchange trader at a foreign bank said.
There were a “lot of buying orders (for dollars) between 83.26-83.27,” the trader added.
Asian currencies were mostly higher on Monday but the off-shore Chinese yuan fell 0.2%. The dollar index was last quoted higher at 103.43.
Indian equity indexes rose to fresh record highs following wins for Prime Minister Narendra Modi’s Bharatiya Janata Party in state elections.
The poll results will boost market sentiment and ease fears of fiscal populism in the run up to the national elections in 2024, analysts said.
The NSE Nifty 50 index ended higher by 2.07% and touched an intra-day record high of 20,702.65.
“The (rupee) market seems to be constantly ignoring positive developments,” Dilip Parmar, a foreign exchange research analyst at HDFC Securities said, referring to how the supportive global cues have been unable to lift the local unit.
While the dollar index fell 3% in November amid a slump in U.S. yields, the rupee stayed on the sidelines and ended the month slightly weaker even as Asian currencies rallied.
Investors now await U.S. economic data due this week, starting with the ISM manufacturing PMI on Tuesday and culminating in closely watched labour market data on Friday.
The Reserve Bank of India will also deliver its policy decision later on Friday when it is widely expected to hold rates steady.
(Reporting by Jaspreet Kalra; Editing by Dhanya Ann Thoppil)
