Mumbai, Jun 2 (PTI) The rupee appreciated 16 paise to settle at 85.39 (provisional) against the US dollar on Monday, supported by a weak American currency and on expectations of a further reduction in key interest rate by the Reserve Bank.
However, a sharp gain in the local unit was prevented due to volatile equity markets, outflow of foreign funds and higher crude oil prices, forex traders said.
RBI’s Monetary Policy Committee (MPC) will begin the deliberations on its next bi-monthly policy on June 4 and the outcome is scheduled to be announced on June 6.
At the interbank foreign exchange, the domestic unit opened at 85.55 and moved between a high of 85.30 and low of 85.55 against the greenback during the day. The unit ended the session at 85.39 (provisional), registering a gain of 16 paise from its previous closing level.
On Friday, the rupee ended 7 paise lower at 85.55 against the dollar.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan Choudhary said that the surge in crude oil prices weighed on the rupee at higher levels. Brent crude, the global oil benchmark, climbed 3.44 per cent to USD 64.94 per barrel in futures trade.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.55 per cent at 98.71.
According to analysts, the US dollar fell on trade uncertainty after US President Donald Trump announced plans to double duties to 50 per cent on import of steel and aluminium.
Meanwhile, a monthly survey released on Monday showed India’s manufacturing sector growth fell to a three-month low in May, restricted by inflationary pressures, softer demand and heightened geopolitical conditions.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 58.2 in April to 57.6 in May, highlighting the weakest improvement in operating conditions since February.
In the domestic equity market, the 30-share BSE Sensex fell 77.26 points, or 0.09 per cent, to close at 81,373.75, while the Nifty declined 34.10 points, or 0.14 per cent, to 24,716.60.
Foreign institutional investors (FIIs) sold equities worth Rs 6,449.74 crore on a net basis on Friday, according to exchange data.
The latest government data released on Friday showed the Indian economy expanded at a faster pace than expected in the last quarter of the 2024-25 fiscal.
The GDP growth rate of 7.4 per cent in the January-March period of FY25 reflected a strong cyclical rebound that was helped by a rise in private consumption and robust growth in construction and manufacturing.
The government also managed to meet its fiscal deficit target of 4.8 per cent of the GDP for 2024-25, according to the provisional data released by the Controller General of Accounts on Friday.
Moreover, the country’s gross GST collection remained above the Rs 2 lakh crore mark for the second month in a row, rising 16.4 per cent in May to over Rs 2.01 lakh crore. Goods and Services Tax (GST) collection had touched a record high of Rs 2.37 lakh crore in April.
As per the Reserve Bank’s weekly data released on Friday showed India’s forex reserves jumped by USD 6.992 billion to USD 692.721 billion during the week ended May 23. The reserve had dropped by USD 4.888 billion to USD 685.729 billion in the preceding week.
