Mumbai:
The rupee declined by 25 paise to end at 74.93 against the US currency on Tuesday due to dollar buying by foreign banks and gains in the greenback in overseas markets.
Forex traders said foreign fund inflows and easing crude oil prices supported the rupee while factors like strong dollar and rising COVID-19 cases dragged down the local unit.
The rupee opened weak at 74.74 at the interbank forex market and fell further to touch an intra-day low of 74.97. The unit settled at 74.93 against the US dollar, down by 25 paise over its previous close of 74.68, marking its second straight day of losses. The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.26 per cent to 96.97.
On the domestic equity market front, the 30-share BSE benchmark Sensex ended 187.24 points, or 0.51 per cent, higher at 36,674.52. The NSE Nifty was up 36 points or 0.33 per cent at 10,799.65. Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 829 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.58 per cent to USD 42.85 per barrel. Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.16 crore and the death toll has topped 5.38 lakh. In India, the death toll due the disease rose to 20,160 and the number of infections crossed the 7 lakh-mark, according to the health ministry.
Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities said the rupee extended losses on dollar buying by foreign banks and weak stocks. According to Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities, an increase in COVID-19 cases and higher gold prices dragged the rupee lower. Spot USDINR is having support around 74.30 and resistance at 75.20, he said. “Asian equity markets’ performance was mixed today with China up strongly again. Most of the Asian and European currencies traded lower vs American dollar amid risk off sentiment,” Vakil said.
He further said the approval rating for the US President Trump declined after surge in cases. “Dollar will probably start considering the policy implications at the end of this month or early August about possible outcome of presidential elections in November. Winning of Joe Biden could be negative for risk assets and positive for the safe haven assets like dollar,” Vakil added. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 74.6822 and for rupee/euro at 84.3167. The reference rate for rupee/British pound was fixed at 93.3537 and for rupee/100 Japanese yen at 69.35.
