Analysts attributed the rupee’s downward move to a strengthening dollar amid weak Asian markets and rising US government bond yields. (Representative image)
On Monday, the rupee fell by 19 paise to close at 83.13 against the dollar.
The rupee remained on the downward track for the second day in a row and closed 14 paise lower at 83.27 (provisional) against the US dollar on Tuesday, reflecting a firm greenback against major foreign currencies and continued outflows of foreign capital. Moreover, weak stock market sentiment and high crude oil prices – hovering above $92 per barrel – weighed on the domestic currency, forex traders said.
At the interbank foreign exchange market, the domestic currency opened at 83.19 and traded between a high of 83.17 and a low of 83.27 against the dollar during the day. Ultimately, the price settled at 83.27 (provisional), down 14 paise from the previous closing price.
On Monday, the rupee fell by 19 paise to close at 83.13 against the dollar.
Analysts attributed the rupee’s downward move to a strengthening dollar amid weak Asian markets and rising US government bond yields.
The US dollar rose to a 10-month high after a Federal Reserve policymaker hinted at a longer rate hike due to the resilience of the US economy. The yield on ten-year US government bonds also rose to a sixteen-year high.
Anuj Choudhary, research analyst at BNP Paribas Sharekhan, said: “The Indian rupee depreciated on Tuesday on a positive note in the US dollar and weak domestic markets. Weak Asian markets and FII outflows also weighed on the rupee.”
He said global risk sentiment worsened due to the renewed housing crisis in China after Evergrande missed a bond call. “However, the decline in crude oil prices prevented a sharp decline in the domestic currency.” “We expect the rupee to trade with a mild negative impact on risk aversion in global markets amid rising US dollar and hawkish stance of the US Federal Reserve. Selling pressure from financial institutions could put further downward pressure on the rupee. However, the decline in crude oil prices may support the rupee at lower levels.
“Traders could take cues from US consumer confidence and new home sales data, which are expected to be weaker than the previous reading. The USD/INR spot price is expected to trade in a range of Rs 82.80 to Rs 83.80,” Choudhary added.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, rose 0.06 percent to 105.94.
Brent crude futures, the global oil benchmark, traded 0.91 percent lower at $92.44 a barrel.
In the domestic equity market, the BSE Sensex closed 78.22 points or 0.12 percent lower at 65,945.47. The broader NSE Nifty fell 9.85 points or 0.05 percent to settle at 19,664.70.
Foreign institutional investors (FIIs) were net sellers in the capital market on Monday as they sold shares worth Rs 2,333.03 crore, according to exchange data.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI)
