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The rupee depreciated 4 paise to close at 79.82 against the US dollar on Tuesday as a stronger US dollar against key rivals and a lacklustre trend in domestic equities weighed on sentiment.
However, fresh foreign fund inflows into capital markets and a sharp correction in crude oil prices restricted the rupee’s decline, forex traders said. At the interbank foreign exchange market, the domestic currency opened at 79.80 per dollar. It hovered in a range of 79.77 to 79.91 during the session. At the interbank foreign exchange market, the domestic currency opened at 79.80 per dollar.
The domestic unit finally settled at 79.82, down 4 paise over its previous close of 79.78. “Rupee traded in a narrow range and volatility was low as most market participants were on the sidelines following the US market holiday,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Somaiya added that the dollar rose to a fresh 20-year high against its major crosses. “Focus will be on the services PMI number that will be released from the US. Better-than-expected data could extend gains for the greenback. We expect the USD-INR (Spot) to trade sideways and quote in the range of 79.40 and 80.05,” Somaiya said. “Focus will be on the services PMI number that will be released from the US. Better-than-expected data could extend gains for the greenback.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.10 per cent higher at 109.64. Brent crude futures, the global oil benchmark, fell by 3.05 per cent to USD 92.82 per barrel.
On the domestic equity market front, the BSE Sensex ended 48.99 points or 0.08 per cent lower at 59,196.99, while the broader NSE Nifty declined 10.20 points or 0.06 per cent to 17,655.60. Foreign institutional investors were net buyers in the capital market on Tuesday as they bought shares worth Rs 1,144.53 crore, as per exchange data.
Corporate inflows and suspected intervention from the RBI kept the rupee’s fall capped but at the same time, weakness in Chinese currency did not allow the rupee to appreciate, said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd. “Over the near term, we expect a range-bound price action in USDINR. The range could be 79.50 and 80.10 on spot.”
“The first half witnessed Dollar strength and the Rupee weakness continued but in the second half due to strong correction in crude oil prices, the rupee appreciated from the lows of 79.9 to 79.75. “Going ahead Rupee can be seen in the range of 79.50 to 80.25,” said Jateen Trivedi, VP Research Analyst at LKP Securities.
