Mumbai, Mar 23 (PTI) The rupee pared initial gains to settle 24 paise lower at 76.42 against the US dollar on Wednesday, pressured by sell-offs in domestic equities and surging global crude prices amid geopolitical uncertainties.
Dollar demand from oil importers and prevailing risk aversion globally added to the woes, forex traders said.
At the interbank foreign exchange market, the rupee opened strong at 76.08 against the American currency but could not hold the momentum and entered negative territory. During the session, it witnessed a low of 76.42 and a high of 75.99.
The domestic unit finally settled at 76.42 against the greenback, down 24 paise from the previous close.
On Tuesday, the rupee had settled flat at 76.18 against the American currency.
“Indian rupee depreciated for the third day in a row following dollar demands from importers ahead of the month and financial year-end and rebound in crude oil prices,” said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar further added that global financial markets have been searching for clear direction on the back of ongoing geopolitical uncertainties. The US Fed’s hawkish bet has been supporting gain in the dollar.
“Rupee traded in a narrow range but fell in the second half after global crude oil prices started to rally sharply. In the last few sessions rupee has been reacting to how crude and the dollar have been moving and volatility has been influenced by these factors,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities the rupee came off session highs to end the day weaker against the dollar amid dollar demand from crude refiners.
While domestic equities declined on concerns about FPI selling domestic assets and this weighed on the local unit.
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd said the USD/INR spot closed at 76.32, due to demand for US dollars from oil marketing companies. Weakness in stocks and higher oil prices also were responsible for the Rupee’s weakness.
“Over the near-term, we expect a range in USD/INR between 75.80 and 76.50 on spot, due to higher oil supporting USD and year-end exporter selling, capping the advance in the pair,” Banerjee added.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.14 per cent higher at 98.63.
Global oil benchmark Brent crude futures jumped 2.16 per cent to USD 117.97 per barrel.
On the domestic equity market front, the 30-share Sensex ended 304.48 points or 0.53 per cent lower at 57,684.82, while the broader NSE Nifty fell 69.85 points or 0.4 per cent to 17,245.65.
Foreign institutional investors emerged as net buyers in the capital market on Tuesday, as they purchased shares worth Rs 384.48 crore, according to stock exchange data. PTI DRR BAL BAL
