Rupee falls 5 paise to close at 83.26 against US dollar due to FII outflows
New Delhi: The rupee declined 5 paise to close at 83.26 (provisional) against the US dollar in limited trade on Tuesday, reflecting a stronger US currency and continued foreign fund outflows overseas.
Forex traders said a negative trend in domestic equities also weighed on the local unit, while improving oil prices supported the currency.
At the interbank foreign exchange market, the local unit opened at 83.23 and touched a low of 83.27 against the greenback. It finally closed at 83.26 (provisional) against the dollar, showing a loss of 5 paise from its previous close.
On Monday, the rupee had fallen and closed at 83.21 against the US dollar.
Forex traders said the rupee is expected to see range-bound trade as investors resorted to dollar buying led by demand for FPI, oil and external commercial borrowings (ECB) redemptions.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.37 percent higher at 105.60.
Brent crude futures, the global oil benchmark, fell 1.78 percent to US$83.66 per barrel.
On the domestic equity market front, Sensex fell 16.29 points or 0.03 per cent to close at 64,942.40. Nifty fell 5.05 points or 0.03 per cent to 19,406.70.
The rupee remained range-bound throughout the session as buying of the US dollar emerged following a fall in the dollar index. Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said a US Federal Bank official hinted at the need for more interest rate hikes to control inflation, which boosted the dollar.
Singh said that among other speakers, the US Fed Chairman is scheduled to speak on Wednesday and Thursday and traders will be watching to see if he supports the dovish stance.
According to Singh, the rupee is likely to trade in a narrow range on Wednesday as well as the RBI has maintained control over the value of the rupee after seeing a slight rise on Monday. “The RBI has been selling US dollars for the last two months to keep a tight rein on the rupee and prevent it from going beyond 83.30,” Singh said.
Foreign institutional investors (FIIs) were net sellers in the capital market on Monday as they sold shares worth Rs 549.37 crore, according to exchange data.
