Indian rupee is trading lower at 73.25 per dollar, amid selling seen in the domestic equity market.
It opened lower by 10 paise at 73.22 per dollar versus Friday’s close of 73.12.
At 14:51 IST, the Sensex was down 380.53 points or 0.78% at 48654.14, and the Nifty was down 128.30 points or 0.89% at 14305.40.
“The movement in USDINR spot is in tandem with other Asian peers and going ahead the optimism over US stimulus package will keep it lower. Last week, we didn’t see much volatility, also RBI’s participation in spot was subdued, however next week we can expect volatility to pick up ahead of Biden’s oath taking ceremony,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
“Also, with two IPO’s opening up for subscription, we can expect RBI protecting the downside in USDINR spot. Broadly, USDINR will continue to trade in between 72.50-73.50,” he added.
The dollar held late-week gains on Monday as softening U.S. economic data and rising coronavirus cases turned investors cautious.
“Due to lower average volumes USDINR pair remained almost flat last week. However, its likely to bounce from its sizeable Put base of 73 and up move in US Dollar index which is stable above 90 levels,” said ICICIdirect.
“The dollar-rupee January contract on the NSE was at Rs 73.16 in the last session. The open interest remained almost flat in the January series contracts,” it added.
Oil prices fell on Monday, extending losses that last week ended a rally driven by production cuts and strong Chinese demand, with the market’s recovery outlook being called into question as coronavirus infections rise.
“A bit of biddishness is seen in the USDINR market possibly after Yellens comments about the weak dollar though not very clear. Imports should be hedged at least for Jan while exports can wait for 73.50 is the view,” said Anil Kumar Bhansali, Head- Treasury, Finrex Treasury Advisors.
“RBI buying provides natural relief for exports. A bit of selling is surely seen in stock markets after the ferocious rise. Advance decline also favoring declines so time for some profit booking,” he added.