Rupee falls as global sentiment wavers: 25 paise drop to 86.56
Forex traders said the rupee continued to face pressure due to sustained foreign fund outflows and the strength of the American currency in the overseas market
The rupee depreciated 25 paise to close at 86.56 (provisional) against the US dollar on Tuesday, as global risk sentiments were dampened amid tariff threats by US President Donald Trump.
Forex Market Dynamics
Forex traders said the rupee continued to face pressure due to sustained foreign fund outflows and the strength of the American currency in the overseas market amid unabated dollar demand from oil importers and weak risk appetite. At the interbank foreign exchange, the rupee opened on a weak note at 86.53, and during the day touched a high of 86.50 and a low of 86.57 against the American currency.
Daily Closing Figures
The local unit settled for the day at 86.56 (provisional), registering a fall of 25 paise over its previous close. On Monday, the rupee depreciated 9 paise to close at 86.31 against the US dollar. "The Indian rupee declined as global risk sentiments were dampened amid tariff threats by US President Donald Trump. This impacted the Chinese Yuan, which also led to strengthening of the US dollar," said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.
Treasury Yields and FII Outflows
Choudhary further said a surge in US treasury yields and FII outflows also pressurized the rupee. However, a decline in crude oil prices cushioned the downside. However, overall weakness in crude oil prices and central bank intervention may support the rupee. Investors may remain cautious ahead of the FOMC (Federal Open Market Committee) meeting outcome this week.
RBI's Open Market Operations
The Reserve Bank of India's announcement of open market operations (OMO) may also support the rupee at lower levels. The Reserve Bank of India on Monday said it will purchase government securities worth Rs 60,000 crore in three tranches and announced several other steps to inject liquidity into the banking system. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.52 percent higher at 107.89.
Brent crude, the global oil benchmark, rose 0.52 percent to USD 77.48 per barrel in futures trade. In the domestic equity market, the 30-share BSE Sensex settled 535.24 points, or 0.71 percent, up at 75,901.41 points, while the Nifty rose 128.10 points, or 0.56 percent, to close at 22,957.25 points. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 5,015.46 crore in the capital markets on a net basis on Monday, according to exchange data.
(Except for the headline, nothing has been changed by All India News Network in the PTI copy.)
