The rupee settled marginally lower by 1 paisa at 85.59 (provisional) against the US dollar on Wednesday, as rising crude oil prices and persistent demand for the greenback from importers and foreign banks weighed on the domestic currency.
Trading in a tight range, the local unit opened at 85.65 at the interbank foreign exchange and oscillated between an intra-day high of 85.53 and a low of 85.70. It eventually closed at 85.59, marking a marginal decline from Tuesday’s close of 85.58, when it had already dropped by 16 paise, news agency PTI reported.
Forex traders noted that pressure from higher US Treasury yields and sustained foreign fund outflows added to the rupee's weakness. However, gains in domestic equity markets and a softer US dollar index provided some cushion to the local currency.
“We expect the rupee to trade with a negative bias on importer demand for dollar and geopolitical tensions in the Middle East. Elevated crude oil prices may also weigh on the rupee,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
He added that a rise in global risk appetite amid easing trade war fears could lend some support to the rupee. “USD-INR spot price is expected to trade in a range of 85.40 to 86,” Choudhary noted.
The dollar index, which tracks the greenback against a basket of six major currencies, was down 0.46 per cent at 99.66. Meanwhile, Brent crude futures rose 1.04 per cent to USD 66.06 per barrel, reflecting supply concerns linked to geopolitical risks.
On the domestic front, equity benchmarks posted gains, with the BSE Sensex rising 410.19 points (0.51 per cent) to settle at 81,596.63, and the NSE Nifty climbing 129.55 points (0.52 per cent) to end at 24,813.45.
Despite positive equities, foreign institutional investors (FIIs) remained net sellers, offloading shares worth Rs 10,016.10 crore on Tuesday, according to stock exchange data.
Trading in a tight range, the local unit opened at 85.65 at the interbank foreign exchange and oscillated between an intra-day high of 85.53 and a low of 85.70. It eventually closed at 85.59, marking a marginal decline from Tuesday’s close of 85.58, when it had already dropped by 16 paise, news agency PTI reported.
Forex traders noted that pressure from higher US Treasury yields and sustained foreign fund outflows added to the rupee's weakness. However, gains in domestic equity markets and a softer US dollar index provided some cushion to the local currency.
“We expect the rupee to trade with a negative bias on importer demand for dollar and geopolitical tensions in the Middle East. Elevated crude oil prices may also weigh on the rupee,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
He added that a rise in global risk appetite amid easing trade war fears could lend some support to the rupee. “USD-INR spot price is expected to trade in a range of 85.40 to 86,” Choudhary noted.
The dollar index, which tracks the greenback against a basket of six major currencies, was down 0.46 per cent at 99.66. Meanwhile, Brent crude futures rose 1.04 per cent to USD 66.06 per barrel, reflecting supply concerns linked to geopolitical risks.
On the domestic front, equity benchmarks posted gains, with the BSE Sensex rising 410.19 points (0.51 per cent) to settle at 81,596.63, and the NSE Nifty climbing 129.55 points (0.52 per cent) to end at 24,813.45.
Despite positive equities, foreign institutional investors (FIIs) remained net sellers, offloading shares worth Rs 10,016.10 crore on Tuesday, according to stock exchange data.
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