rupee-declines-21-paise-against-us-dollar

Weighed down by outflow of foreign funds and a firm American currency, the rupee declined 21 paise to settle at 85.60 (provisional) against the US dollar on Tuesday.

With the Reserve Bank of India (RBI) due to announce its Monetary Policy Committee (MPC) deliberations on June 6, investors are awaiting cues. Forex traders say the rupee was under pressure on Tuesday as it tracked domestic equity markets amid geopolitical tensions still prevailing.

At the interbank foreign exchange, the domestic unit opened at 85.55 and moved between the high of 85.44 and a low of 85.60 against the greenback during the day. It closed the session at 85.60 (provisional) against the dollar, registering a loss of 21 paise from its previous close.

On Monday, the rupee appreciated 16 paise to settle at 85.39 against the dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee weakened against the dollar on weak domestic equities and FII outflows.

“Trade tensions between US and China and renewed geopolitical tensions between Ukraine and Russia may also weigh on the domestic unit. Traders may take cues from job openings and factory orders data from the US,” Choudhary said, adding that the USD-INR spot price was expected to trade in a range of 85.20 to 85.90. 

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.25 per cent at 98.95.
Analysts said the US dollar index lost some ground after ISM manufacturing PMI fell more than expected, but recovered soon as China’s manufacturing PMI showed slower-than-expected growth in that country.

Brent crude, the global oil benchmark, fell 0.12 per cent to USD 64.55 per barrel in futures trade.

Foreign institutional investors (FIIs) sold equities worth ₹2,589.47 crore on a net basis on Monday, according to exchange data.

A monthly survey released on Monday showed India’s manufacturing sector growth fell to a three-month low in May, restricted by inflationary pressures, softer demand and heightened geopolitical conditions.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell from 58.2 in April to 57.6 in May, highlighting the weakest improvement in operating conditions since February.