The rupee declined by 3 paise to settle at 82.92 (provisional) against the U.S. dollar on February 28, tracking bearish equity markets and foreign fund outflow amid increased month-end demand for the American currency.
Forex analysts said that softening crude oil prices provided a cushion to the Indian currency which was weighed down by a stronger dollar.
Also, market participants were cautious ahead of the domestic GDP data to be released on February 29 and the U.S. GDP numbers expected on February 28, they said.
At the interbank foreign exchange market, the local unit opened at 82.90 and touched the intra-day low of 82.95 against the greenback. The local unit finally settled at 82.92 (provisional) against the dollar, registering a loss of 3 paise from its previous close.
On February 27, the rupee settled 1 paisa lower at 82.89 against the U.S. dollar.
Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas, said the Indian rupee fell on weak domestic markets and a strong U.S. dollar, however, softening crude oil prices cushioned the downside.
"We expect rupee to trade with a slight negative bias on weak global equities and month-end dollar demand from importers and OMCs (oil marketing companies).
"Traders may take cues from Q4 GDP data (2nd estimates) from the US. Investors may remain cautious ahead of inflation data from the US this week. USD-INR spot price is expected to trade in a range of ₹82.70 to ₹83.10," Mr. Choudhary said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was 0.37% higher at 104.21.
Brent crude futures, the global oil benchmark, declined 0.92% to $82.88 per barrel.
On the domestic equity market front, Sensex plunged 790.34 points, or 1.08%, to settle at 72,304.88 points. The Nifty tumbled 247.20 points, or 1.11%, to close at 21,951.15 points.
Foreign institutional investors (FIIs) were net sellers in the capital markets on February 27 as they sold shares worth ₹1,509.16 crore on a net basis, according to exchange data.
