Mumbai, Aug 1 (PTI) The rupee declined 5 paise to settle at 83.73 against the US currency on Thursday amid a rise in demand for the dollar and an increase in crude oil prices.
The rupee opened higher at 83.67 due to weakness in the US dollar in overseas markets after the US Federal Reserve hinted at a rate cut in the near future.
The unit however failed to hold onto gains and fell to the day’s low of 83.75 later. The domestic unit settled at 83.73, down 5 paise from the previous close.
At the interbank foreign exchange market, the domestic currency had closed at 83.68 against the US dollar on Wednesday.
Forex traders said gains from a weak dollar were offset by month-end dollar demand and rising crude prices.
“With the Fed’s outlook largely priced in, data confirming the Fed’s potential rate cut in September will be crucial, particularly in terms of higher unemployment and lower inflation in the coming weeks.
“Additionally, rising crude prices exerted further pressure on the rupee, which had previously been supported by lower oil costs. The rupee is expected to trade within the range of 83.60-83.85 in the near term,” Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rebounded from early lows and gained 0.29 per cent to 104.17 in late Asian trade.
Brent crude — the global oil benchmark — rose by 0.78 per cent to USD 81.47 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex climbed 126.21 points to close at a record high of 81,867.55, while the Nifty rose 59.75 points to breach the 25,000 mark for the first time.
Foreign institutional investors were net buyers in the capital markets on Thursday and bought shares worth Rs 2,089.28 crore, according to exchange data.
Meanwhile, India’s manufacturing sector growth eased slightly to 58.1 in July from 58.3 in June on softer increases in new orders and output, while cost pressures and demand strength led to the steepest increase in selling prices since October 2013.