The Indian rupee consolidated in a narrow range and depreciated 3 paise to close at its all-time low of 83.66 (provisional) against the US dollar on Friday, weighed down by strong American currency and muted trend in domestic equities. The benchmark S&P/BSE Sensex fell 739 points, or 0.91 percent, to 80,605 while the broader Nifty index closed at 24,531, down 270 points, or 1.1 percent from its previous close. At the interbank foreign exchange market, the local unit opened at 83.64, and touched an intra-day high of 83.60 and a low of 83.66 against the dollar during the trading session. According to RBI Bulletin, the Indian rupee has begun to gain in July on the back of strong capital inflows, barring intermittent corrections, in spite of increase in the trade deficit and firming international crude prices weighing on the downside. Despite volatility triggered by spillovers over market expectations relating to the future course of monetary policy and a fluctuating US dollar (DXY), the rupee is trading in a tight range. Currency hedging costs have accordingly become lower than earlier. The euro is being reportedly preferred as the currency to fund long rupee carry trade. Meanwhile, in June, INR depreciated by 0.1 per cent (m-o-m) vis-vis the US dollar as emerging market currencies faced depreciating pressures on the back of the strengthening US dollar and rising commodity prices. The INR, however, remained one of the least volatile major currencies during the month, the central bank noted.
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