Mumbai: The rupee fell 3 paise to close at 88.77 against the US dollar on Tuesday, weighed down by a strong American currency against major crosses overseas.
The domestic currency traded in a tight range as investors preferred to remain on the sidelines amid uncertainties over global trade, forex traders said.
At the interbank foreign exchange market, the rupee opened with a marginal gain at 88.72 against the US dollar and touched the intra-day low of 88.79 before ending the session at 88.77, registering a loss of 3 paise from its previous closing level.
On Monday, the rupee gained 5 paise to settle at 88.74 against the US dollar.
Investors moved cautiously after the US Senate once again rejected both Democratic and Republican proposals to fund the government, prolonging the government shutdown into its sixth day, traders said.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said the rupee witnessed limited volatility as FII selling eased and crude prices remained soft.
However, the domestic unit continues to hover near its all-time low levels, keeping concerns of further weakness alive, possibly toward 90 levels if sentiment worsens, he added.
“This week’s focus remains on Fed Chair Powell’s speech, the release of Fed meeting minutes, and key US data on unemployment and non-farm payrolls, which could induce sharp volatility. The rupee range is expected between 88.45 and 88.95,” Trivedi said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, increased 0.34 per cent to 98.13.
Brent crude, the global oil benchmark, was trading 0.37 per cent lower at USD 65.25 per barrel in futures trading.
Commerce and Industry Minister Piyush Goyal on Tuesday said India and the US are in continuous dialogue on the proposed bilateral trade agreement, and all possibilities are there to meet the November deadline for concluding the talks.
Goyal’s comment came a day after External Affairs Minister S Jaishankar said that any trade deal between India and the US must respect New Delhi’s “red lines”, and efforts are underway to reach an understanding.
According to Jaishankar, there were “issues” between India and the US, and many of them were linked to the inability to firm up the proposed trade deal, even as he noted that “there are things you can negotiate and there are things you can’t”.
In the domestic equity markets, Sensex climbed 136.63 points or 0.17 per cent to settle at 81,926.75, while Nifty went up 30.65 points or 0.12 per cent to 25,108.30.
Foreign institutional investors bought equities worth Rs 1,440.66 crore on a net basis on Tuesday, according to exchange data.
