The Indian rupee depreciated against the US dollar on Friday, closing at 94.25 per dollar, down from 94.04. The currency declined throughout the day, hitting an intraday low of 94.29 after opening at 94.05. This drop was primarily influenced by rising Brent crude oil prices, which surged to approximately $95.87 per barrel due to concerns over supply disruptions stemming from attacks on Saudi Aramco’s infrastructure and ongoing shipping issues in the Strait of Hormuz. On Thursday, oil was trading at around $92.31 per barrel.
Additionally, the dollar index maintained strength at about 103.19, nearing a 19-month high, further exerting pressure on the rupee. Increased buying from oil importers and state-run banks, along with short covering by traders, also contributed to the rupee’s decline. Nevertheless, foreign portfolio investment inflows into local equities provided some cushion for the currency.
Market analysts expect the rupee to remain under pressure due to high crude prices and a robust dollar index, predicting it will trade between 93.75 and 94.75 per dollar on Monday, ahead of upcoming US producer price index data.
In the foreign exchange reserves sector, India reported an increase of $2.49 billion to $719.547 billion for the week ending November 6, breaking an eight-week streak of declines. This increase was largely driven by a $2.21 billion rise in gold reserves. However, foreign currency assets dipped by $232 million during the same period.
In the bond market, the yield on the benchmark 10-year government security rose by six basis points to 7.31%. The five-year yield also increased by three basis points to 6.98%. Analysts suggest that yields could trend higher, possibly reaching 7.40%, depending on further movements in crude oil prices and external factors.
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