The rupee edged higher by three paise to 66.46 against the US dollar in early trade on Wednesday.
The reserves rose to $501.70 billion helped by a whopping rise in foreign currency assets, the latest data from the Reserve Bank of India.
Extending losses for the second straight session, the rupee slipped by 11 paise at 66.54 against the US dollar.
On a weekly basis, the rupee fell by 1.36 per cent or 75 paise as dollar demand outweighed supply and stocks fell.
The government's step could push investors to choose riskier equity, or to fall back on bank deposits, thereby negatively impacting the debt market which actually needs to grow, points out T N Ninan.
Strengthening of euro against the dollar in overseas market and a higher opening in the equity market supported the rupee.
The dollar index was up by 0.04 per cent against a basket of six major global rivals.
With Indian stocks under pressure, the rupee tumbled to a low of 54.89 on emergence of dollar demand from importers and some banks on expectations of further rise in dollar overseas.
The rupee had gained 11 paise to end at one-week high of 54.84 against the US dollar in Wednesday's trade on sustained selling of the US dollar by exporters and capital inflows.
Rupee fell to 45.03 in the Interbank Foreign Exchange Market against the dollar in morning trade today on worries of capital outflows which may increase because of equity sales by foreign investors.
Brokers said a weak trend in euro in overseas markets also dampened the rupee sentiment against the US dollar.
In New York, the dollar slipped against the euro and other major currencies yesterday after the US economic data boosted equities.
Besides, steady euro against the American unit and a higher opening in the domestic equity market supported the rupee, forex dealers said.
Participatory Notes (P-Notes) are derivative instruments issued by FIIs to foreign investors -- individuals or corporates -- who want exposure to Indian equities, but do not want to register with Sebi.
The domestic currency has fallen past the 56-level against the dollar after June 29.
Strong MF investments, stemming of FII outflows and positive earnings in Q3 have helped market, say analysts.
IT stocks on Wednesday rose as much as 3 per cent in an otherwise weak stock market after sentiments turned buoyant amid the rupee sinking to an all-time low of 60.35 against the dollar, as the stronger US currency boosts the sales of software firms in rupee terms.
Foreign Portfolio Investors' (FPIs) selling spree continues as they pulled out over Rs 3,400 crore from the Indian equity markets in the first three trading sessions of November on rising interest rates and geopolitical tensions in the Middle East. This came after such investors withdrew Rs 24,548 crore in October and Rs 14,767 crore in September, data with the depositories showed. Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs 1.74 lakh crore during the period.
At the Interbank Foreign Exchange market, the domestic unit resumed lower at 54.42 a dollar from overnight close of 54.26 and moved in a narrow range of 54.34 and 54.46.
Foreign institutional investors pulled out Rs 86.66 crore (Rs 866.6 million) from local stocks on Monday, as per provisional BSE data.
Exuding confidence that current account deficit (CAD) will come down to 3.7 per cent of GDP in 2012-13, Finance Minister P Chidambaram on Monday said overseas capital flows would be sufficient to bridge the gap in inflow and outflow of foreign funds.
Amid rupee sliding below 64 to a dollar, global agency Standard & Poor's on Tuesday said it will maintain negative outlook for the country as currency depreciation is adversely impacting investor confidence.
The recovery in equities in the early session capped the rupee's fall.
The rupee ended the day stronger against the dollar.
Indian markets on Thursday shrugged off any negative impact.
The value of foreign portfolio investment (FPI) in Indian equities was at $542 billion in the March quarter of 2023, a decline of 11 per cent from the preceding year, largely due to the exodus of foreign money from the domestic market, according to a Morningstar report. In comparison, the value of FPI in Indian equities was $612 billion in the January-March quarter of 2022. On a quarter-on-quarter basis, the value of FPI in Indian equities fell by 7 per cent from $584 billion recorded in the three months ended December 2022.
'For the next two years, we expect the bulk of earnings growth contribution from sectors like financials and energy, where the outlook remains positive, while the sectors which are linked to domestic consumption and are currently witnessing strains on margins have low salience for Nifty earnings.'
Foreign portfolio investors (FPIs) infused Rs 11,630 crore in the Indian equity markets in April on the reasonable valuation of stocks and appreciation in the rupee. This came after FPIs infused a net sum of Rs 7,936 crore in equities in March, mainly driven by bulk investment in the Adani Group companies by the US-based GQG Partners. However, if one adjusts for the investments of GQG in Adani Group, the net flow was negative.
'The government expects demand for electronic products to reach $400 billion by 2023-24. This would be a huge foreign exchange outflow, which may further widen our trade deficit with other nations. Hence, the government plans to push local electronics manufacturing to cut down on their import bill.'
Indian rupee, which earlier this week touched an all-time low, is likely to remain under pressure and may test new levels as a fallout of the US Federal Reserve indicating more interest rate hikes, experts said. The aggressive rate hikes will dampen demand and increase the possibility of a recession in the US. This could accelerate the pace of capital outflows, weaken the rupee and raise the threat of imported inflation.
Various global and domestic factors had a sizable impact on the performance of the Indian markets
Fresh demand for the US currency from importers and banks alongside sustained capital outflows by foreign funds weighed on the local unit
Reliance Industries Ltd, the nation's most valuable company, on Thursday said it has raised $4 billion (around Rs 30,000 crore) in debt through the largest ever foreign currency bond issuance by an Indian entity. The oil-to-telecom conglomerate plans to use the proceeds of the three tranche issues to retire existing borrowings. The issue was "nearly 3 times oversubscribed with a peak order book aggregating around $11.5 billion," the company said in a statement. This is the largest ever foreign currency bond transaction in India, eclipsing ONGC Videsh Ltd's $2.2 billion US dollar bonds issue of 2014.
The rupee rose by seven paise to 62.10 against the dollar.
In New York, the dollar fell against other major currencies on Monday after a December reading on the US services sector came in below market expectations.
IPO market hopes to come out of slump in festive season, reports Sundar Sethuraman.
In forward market today, premium for dollar declined on sustained receivings from exporters.
Continuing its fall for the sixth consecutive day, the Indian rupee on Monday depreciated by 43 paise against the greenback in opening trade
In a dazzling resurgence, foreign investors have graced the Indian equity markets with an influx of nearly Rs 1.5 lakh crore in 2023, fuelled by optimism over the country's resilient economic fundamentals amid shadows of a gloomy global scenario. Experts believe that the positive trend may continue in 2024. This follows Indian equities witnessing the worst-ever net outflow of Rs 1.21 lakh crore by FPIs in 2022 on aggressive rate hikes by the central banks globally after net inflows for three consecutive years.
Foreign Portfolio Investors (FPIs) selling spree continued as they dumped Indian equity worth over Rs 5,800 crore this month so far on rising interest rates and geopolitical tensions in the Middle East. This came after such investors withdrew Rs 24,548 crore in October and Rs 14,767 crore in September, data with the depositories showed. Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs 1.74 lakh crore during the period.
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