Mumbai, Sep 4 (IANS): Bearish equity markets and recovery in global crude oil prices, coupled with outflow of funds from Indian bourses, dipped the rupee's value against the US dollar on Friday.
The Indian currency closed at 66.47 to a dollar, down 23 paise from its previous close of 66.24 on Thursday. The rupee had touched an intra-day high of 66.52.
"The rupee followed the downward trajectory of the equities markets. The value was eroded dure to the demand by importers and the Reserve Bank's attempts at defend the currency," Hiren Sharma, senior vice president, currency advisory at Anand Rathi Financial Services, told IANS.
The rupee lost strength following the barometer index of the Indian equity markets-- the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) which plunged by 562.88 points or 2.18 percent on Friday.
Investor sentiments were dented on back of fears of an interest rate hike in the US, bearish comments from the Eurozone and strengthening crude oil prices.
Other trigger for rupee's weakening was a recent steep rise in the crude oil prices.
"The steep rise of around $10 per barrel in 2-3 day's time is a cause of worry. Especially given the fact that the rupee is falling," Anand James, co-head, technical research, Geojit BNP Paribas, told IANS.
On Thursday, the West Texas Intermediate (WTI) closed at $46.75 a barrel, while Brent crude settled at $50.68 a barrel. Both the indices were around $42-45 per barrel a week ago.
Foreign funds went on a selling spree in the Indian market just before the release of an important macro data on the US economy which could influence the US Fed's rate decision expected on September 16-17.
The selling frenzy was supported by the expectations of the US Fed to raise interest rates after a decade or so of easy monetary regime with interest rates pegged at near zero levels.
High interest rates in the US are expected to lead away the foreign portfolio investors (FPIs) from emerging markets like India. It is also expected to dent business margins as access to capital from the US will become expensive.
The data with the National Securities Depository Limited (NSDL), showed that the FPIs off-loaded stocks worth Rs.332.25 crore or $50.17 million on Friday.