The Indian rupee weakened by 3 paise, opening at a record low of 84.90 against the US dollar. It has closed at 84.87 on Monday. The trade deficit data has had a direct impact on the currency as the deficit has widened to a record high in November, led by a jump in gold imports.
The trade gap widened to $37.8 billion in November, compared to $27.1 billion in October, according to a press briefing by the Ministry of Commerce and Industry on Monday.
"Indian rupee is expected to open at it's lowest after a record number in respect of imports and a record Trade deficit for Nov. 24 mainly on account of increase in gold buying took rupee lower in the NDF markets," said Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP. Bhansali expects the range for the day to be 84.75/00 with a close watch on RBI.
The rupee's downside appears limited, according to Amit Pabari, managing director of CR Forex Advisors. The US dollar and Indian rupee pair is expected to hover between 84.50 and 85 in the near term, he said.
US dollar index, which measures the currency against a basket of foreign units, stood at 106.8070 and was 0.05% down.
"The dollar index was supported at 106.74 as rate cut bets on 2025 evaporated in thin air due to worries of resurgence of inflation on unknown policy mix and sticky prices," said Bhansali.
Brent Crude Oil was at $73.86 and was down 0.05%.
"Brent oil prices inched lower at $73.89 per barrel as soft Chinese economic data weighed on sentiments and traders remained cautious before the all important FED meeting beginning today," said Bhansali.
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