The rupee depreciated by 25 paise to close at 79.40 against the U.S. dollar on Thursday, posting its second day of losses amid disappointing macroeconomic data and U.S.-China tensions.
Participants also stayed on the sidelines ahead of the RBI’s interest rate decision on Friday, forex traders said.
At the interbank foreign exchange market, the local currency opened at 79.21 and dropped to an intra-day low of 79.85. It clawed back some lost ground to finally end at 79.40, down 25 paise over its previous close of 79.15.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.27% to 106.22.
Brent crude futures, the global oil benchmark, advanced 0.69% to $97.45 per barrel.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, volatility for the rupee will remain high following increasing tensions between China and U.S. following U.S. House Speaker Nancy Pelosi’s visit to Taiwan.
“We expect the USD-INR (spot) to trade sideways and quote in the range of 79.20 and 79.80 in the short-term,” Mr. Somaiya added.
On the domestic equity market front, the BSE Sensex ended 51.73 points or 0.09% lower at 58,298.80 points, while the broader NSE Nifty fell 6.15 points or 0.04% to 17,382.00 points.
Foreign institutional investors remained net buyers in the capital market on Wednesday as they purchased shares worth ₹765.17 crore, as per exchange data.
Forex traders said the rupee is underperforming among Asian currencies amid a record high trade deficit and safe-haven demand for the dollar as investors weigh risks associated with the U.S.-China tensions.
