Wednesday saw the rupee dwindling by 13 paise to close at 86.47 (provisional) against the US dollar. Forex traders said the depreciation was a result of weak domestic equity markets, elevated crude oil prices, and a strong dollar.
Selling pressure from foreign investors also impacted the local unit, said analysts, adding that the domestic markets are falling on risk aversion in the global markets amid the ongoing geopolitical conflict in the Middle East.
There was heavy volatility witnessed at the interbank foreign exchange by the rupee, opening at 86.42 against the greenback and touching an intra-day high of 86.25 and a low of 86.57 during the day.
Wednesday’s closing session saw the local unit finally close at 86.47 (provisional), down 13 paise over its last closing price.
On Tuesday, the rupee had declined 30 paise to close at 86.34 against the greenback.
Research analyst Anju Choudhary, from Mirae Asset Sharekhan, said he expected the rupee to trade with a negative bias on risk aversion in the global markets and worries over rising crude oil prices. Although, he pointed out, any de-escalation of tensions may see a recovery in the global risk assets.
“Traders may take cues from weekly unemployment claims data from the US. They may also await the Federal Open Market Committee (FOMC) meeting outcome. The US Federal Reserve is expected to keep interest rates unchanged. USDINR spot price is expected to trade in a range of 86.15 to 86.90," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.17 per cent at 98.65.
Brent crude, the global oil benchmark, fell 0.86 per cent to USD 75.79 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex declined 138.64 points, or 0.17 per cent, to close at 81,444.66, while the Nifty fell 41.35 points, or 0.17 per cent, to 24,812.05.
Foreign institutional investors (FIIs) purchased equities worth ₹1,482.77 crore on a net basis on Tuesday, according to exchange data.
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