Pressure on rupee persists: Currency slips past 90 per dollar, closes 22 paise lower amid dollar strength and FII outflows

The rupee slipped again below the psychologically important 90 level and settled 22 paise lower at 90.20 (provisional) against the US dollar on Friday, weighed down by disappointing domestic macroeconomic data and a stronger greenback in overseas markets, PTI reported.

At the interbank foreign exchange, the rupee opened at 89.95 and moved between an intra-day low of 90.25 and a high of 89.92 before closing at 90.20, down from its previous close of 89.98. On Thursday, the local unit had already weakened by 10 paise.


Forex traders said persistent foreign fund outflows and strong dollar demand from importers continued to pressure the currency. However, softer crude oil prices and a sharp rally in domestic equities helped limit the extent of losses, while possible intervention by the Reserve Bank of India at lower levels offered some support.

“Indian rupee fell on Friday, breaching the 90-mark once again amid disappointing macroeconomic data and a positive US dollar index… FII outflows too weighed on the rupee. However, weak crude oil prices and a surge in the domestic equities cushioned the downside. RBI reportedly sold dollars via state-owned banks, which also prevented the pace of fall,” said Anuj Choudhary, Research Analyst, Commodities, Mirae Asset Sharekhan.

On the macroeconomic front, India’s manufacturing sector showed its weakest improvement in two years in December, driven by slower growth in new orders. The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell to 55 in December from 56.6 in November, though it remained above the 50-mark that separates expansion from contraction.

Meanwhile, the dollar index, which tracks the US currency against a basket of six major currencies, was trading 0.07 per cent higher at 98.38. Brent crude, the global oil benchmark, declined 0.58 per cent to $60.52 per barrel in futures trade.

Domestic equity markets ended sharply higher, with the Sensex jumping 573.41 points to close at 85,762.01 and the Nifty rising 182 points to 26,328.55. Foreign institutional investors, however, sold equities worth Rs 3,268.60 crore on Thursday, according to exchange data.