Daijiworld Media Network - Mumbai
Mumbai, Aug 17: The rupee depreciated 17 paise to 95.59 against the US dollar in early trade on Monday, with forex traders saying the overall risk-reward remained tilted towards weakness.
Market sentiment turned cautious after the Reserve Bank of India (RBI) on August 14 announced that its swap facility for Foreign Currency Non-Resident (Bank) or FCNR (B) deposits would be available only for deposits mobilised until August 31. The earlier cut-off date was September 30.
Under the FCNR (B) scheme, banks offer attractive interest rates to mobilise foreign currency deposits.
The RBI on Friday said its concessional swap facility, introduced to encourage foreign currency inflows, had attracted $56.84 billion as of August 13.
At the interbank foreign exchange market, the rupee opened at 95.50 and subsequently fell to 95.59, down 17 paise from its previous close.
On Friday, the rupee had appreciated three paise to close at 95.42 against the US dollar.
"After attracting nearly $50 billion of forex inflows, the central bank has now announced that the facility will be available only for deposits mobilised until August 31, 2026. The support from these inflows remains significant, but the market will eventually begin looking beyond this temporary cushion," said CR Forex Advisors Managing Director Amit Pabari.
While the rupee may remain supported in the near term, the overall risk-reward appears tilted towards weakness, Pabari said.
"Technically, the 95.20-95.30 zone is likely to act as an important support area. As long as this level holds, USD/INR could gradually move towards the 96.20-96.50 region in the coming days," he said.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six major currencies, was trading 0.12% lower at 99.54.
Brent crude, the global oil benchmark, rose 0.47% to $88.94 a barrel in futures trade.
On the domestic equity market, the Sensex declined 284.85 points to 77,717.05 in early trade, while the Nifty fell 69.25 points to 24,297.05.
Foreign institutional investors bought equities worth Rs 508.12 crore on a net basis on Friday, according to exchange data.
Meanwhile, India's foreign exchange reserves surged by $14.136 billion to $707.002 billion during the week ended August 7, the RBI said on Friday. The reserves had increased by $10.512 billion to $692.866 billion in the previous reporting week ended July 31.