Rupee Closes Weaker Against Dollar As Oil, Dollar Index Rise

The rupee closed weaker against the US dollar on Friday, following the rise in crude oil prices and the dollar index in the global market.

The local currency depreciated two paise to close at Rs 83.56 against the greenback. It closed at Rs 83.54 on Thursday.

Crude oil surged on reports that Saudi Arabia did not renew its petrodollar agreement with the US, while the dollar index rose due to the depreciation of the euro and Japanese yen.

The euro faced a decline due to investor uncertainty arising from the exit poll results of the elections, The Japanese yen fell because of a gradual reduction in the amount of bonds purchased by the central bank of Japan.

The dollar index was 105.62, while 10-year US bond yields were 4.209%. According to the CME FED Tool, the probability of a September rate cut remains above 65%, keeping market hopes alive.

"The Indian rupee weakened slightly after Asian and European currencies were all down as the dollar index moved up," Anil Kumar Bhansali, the Head of Treasury and Executive Director of Finrex Treasury Advisors LLP, said.

The Brent crude oil price was trading at $82.52 per barrel during mid-European trade on a solid demand outlook.

"The rise came as Saudi Arabia reportedly did not renew its 50-year agreement on the Petrodollar with the USA, as well as expectations of demand returning in case the US goes for rate cuts," Bhansali said.

"Both are important predictors of the health of the US job market and inflation, hinting towards a not-so-resilient situation," Amit Pabari, the Management Director of CR Forex Advisors, said.

"Given the nervousness surrounding the budget due in July, a sustained trend reversal in the inflows could be seen post-Budget as investors seek clarity on policy continuity to make fresh investments," Pabari said.

"For USDINR, Rs 83.45 will act as a support while Rs 83.60 is an immediate resistance followed by Rs 83.72," Kunal Sodhani, Vice President Of Shinhan Bank, said.