Mumbai: The rupee depreciated 14 paise to close at 90.70 (provisional) against the US dollar on Wednesday, on dollar demand from importers and geopolitical tensions.
Forex traders said the rupee is trading with a slight negative bias amid geopolitical tensions and elevated crude oil prices. Dollar demand from importers may also pressurise the rupee. However, FPI inflows may support the local unit at lower levels.
At the interbank foreign exchange market, the rupee opened at 90.56 against the US dollar, and touched a low of 90.75 and a high of 90.46 against the greenback in intraday trade.
The rupee eventually settled at 90.70, registering a fall of 14 paise over its previous close.
On Tuesday, the rupee pared initial losses and settled on a positive note, higher by 10 paise at 90.56 against the US dollar.
“Indian rupee declined today on dollar demand from importers and geopolitical tensions. A surge in crude oil prices, too, weighed on the rupee. However, a weak US dollar and foreign inflows cushioned the downside. Dollar weakened on disappointing ADP non-farm employment and retail sales data from the US,” said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
Forex traders said while markets initially welcomed the India-US trade deal, fresh concerns have emerged after the White House released its fact sheet.
The fact sheet highlights key terms of the agreement, including that India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products.
This includes dried distillers’ grains, red sorghum, tree nuts, and fresh and processed fruit, certain pulses, soybean oil, wine and spirits, and additional products, and India has committed to buying more American products and purchase over USD 500 billion of US energy, information and communication technology, agricultural, coal, and other products.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.26 per cent lower at 96.54.
Brent crude, the global oil benchmark, was trading 1.44 per cent higher at USD 69.78 per barrel in futures trade.
On the domestic equity market front, Sensex dropped 40.28 points to settle at 84,233.64, while the Nifty was up 18.70 points to 25,953.85.
On Tuesday, foreign institutional investors purchased equities worth Rs 69.45 crore, according to exchange data.
