Rupee Ends Weaker Despite Dollar Correction, Strong Equities

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The rupee ended the day on a weaker note despite a correction in the dollar and strong domestic equities. The higher crude oil prices capped the upside in the rupee.

The Indian rupee closed at 83.09 per dollar on Tuesday, down 0.12% from its previous close of 82.97. The dollar index, which measures the value of the dollar against a basket of six major currencies, fell 0.1% to 92.32.

The rupee had been trading stronger in the morning, tracking gains in the dollar index. However, the gains were capped by the rising crude oil prices. Brent crude oil futures rose 0.6% to $74.72 a barrel.

The higher crude oil prices weighed on the rupee as India is a net importer of oil. The country imports about 85% of its oil requirements.

The rupee is also expected to be weighed down by the upcoming inflation data. The Reserve Bank of India (RBI) is scheduled to release the inflation data for August on Wednesday. The inflation is expected to remain above the RBI’s higher limit of 6%.

The RBI is likely to keep the key policy rates unchanged in its next monetary policy review on September 29. However, the central bank may change its stance to hawkish if the inflation continues to remain above its target.

Overall, the rupee is expected to remain under pressure in the near term. However, the weakness in the dollar index may provide some support to the rupee.


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