The Indian rupee weakened slightly against the US dollar on Wednesday, closing at 83.9773 due to demand for dollars from oil companies. However, inflows from the Bajaj Housing Finance IPO, which raised $782 million, helped limit the rupee’s decline, according to traders.
Traders were cautious ahead of the release of the US Consumer Price Index (CPI) data, expected later in the day. The rupee remained almost unchanged, ending at 83.9773 against the dollar, compared to its previous close of 83.975, according to data from LSEG.
Anil Bhansali, Head of Treasury at Finrex Treasury Advisors, explained that the rupee initially strengthened to 83.93 per dollar due to IPO inflows but later weakened as oil companies bought dollars amid fears of rising oil prices. Bhansali also mentioned that the Reserve Bank of India may have intervened slightly, as the currency did not cross the 83.98 mark.
Meanwhile, Brent crude oil prices fell by $2.65, or 3.69%, to $69.19 per barrel due to low demand and the impact of Tropical Storm Francine, which led to the shutdown of offshore oil production in the Gulf of Mexico, Reuters reported.
A drop in oil prices is generally positive for India, as the country heavily relies on oil imports. However, the fall in prices encouraged oil companies to buy more oil, which put pressure on the rupee.
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