The rupee fell by 7 paise to end at 83.36 against the US dollar as higher demand for the US currency from oil importers.
The domestic currency fell to a low of 83.45 against the greenback during the intraday trades. The rupee opened at 83.33 compared to the previous close of 83.29 against the dollar.
“Oil importers were the major buyer of the US dollar. This trend is seen towards the end of each year. Besides oil companies, other importers were also seen purchasing dollars,” said a dealer with a state-run bank.
The dollar has also strengthened against other major Asian currencies, he said.
Market participants said the RBI’s intervention in the forex market helped limit the fall in the rupee. The central bank, through nationalized banks, was seen buying dollars at 83.42-83.45, forex dealers said.
The data released by the RBI on Tuesday showed that the country’s current account deficit (CAD) narrowed to $10.5 billion, or 1.2 per cent of gross domestic product (GDP), in the third quarter (October-December) of FY2024 from $16.8 billion, or 2 per cent of GDP, in the year-ago quarter.
In the second quarter of FY2024, the country’s CAD stood at $11.4 billion, or 1.3 per cent GDP.
This reduction in the CAD is a positive development for the rupee, easing some of the pressure it has faced.
“Supported by robust economic growth, impressive PMI figures, and a surge in foreign investment coupled with the narrowing of the CAD, there are clear signs of the Indian rupee gradually gaining strength,” said Amit Pabari, MD CR Forex Advisors.
Short-term projections suggest a potential for the rupee to reach levels approximately around 82.80 against the dollar, with medium-term expectations hovering around 82.50 – 82.20, he said.
