Indian rupee’s decline against UAE dirham continues

The Indian rupee declined 12 paise to 75.72 against the US dollar on Tuesday morning as geopolitical tension and higher inflation in India weighed on investor sentiments.

Forex traders said sustained foreign fund outflows and high oil prices also weakened the rupee position.

At the Indian interbank foreign exchange market, the rupee opened at 75.60 against the US currency, then slipped further to 75.72, registering a decline of 12 paise from the last close.

On Monday, the rupee slumped by 24 paise to close at an over nine-week low of 75.60 against the US currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.18 per cent to 96.19.

On the Indian macroeconomic front, the retail inflation rate breached the six per cent upper tolerance limit of the Reserve Bank of India for the first time in seven months in January, while the wholesale price index stayed in double digits for the 10th month in a row.

“Growing worries about Russia-Ukraine tensions and its impact on crude oil and possible higher global interest rates scenario could cap appreciation bias,” said Sriram Iyer, senior research analyst at Reliance Securities.

Moreover, divergent policy outlooks of the RBI and the US Federal Reserve, higher inflation in India and inaction from the central bank to control it could also cap appreciation bias, Iyer said.

Global oil benchmark Brent future fell 0.68 per cent to $95.82 per barrel.

On the Indian equity market front, the 30-share Sensex was trading 233.49 points or 0.41 per cent higher at 56,639.33 points, while the broader NSE Nifty advanced 48.35 points or 0.29 per cent to 16,1891.15 points.

(with inputs from PTI)

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