Snapping its six-day winning run, the rupee on Wednesday settled 10 paise lower at 70.80 against the U.S. dollar amid rising crude prices and heavy foreign fund outflows.
Forex traders said dollar buying by oil importers and strengthening of the greenback against major currencies overseas weighed on the domestic unit.
At the Interbank Foreign Exchange (Forex) market, the rupee opened on a strong footing at 70.48 and rose further to touch the day’s high of 70.40.
However, it pared the initial gains and finally closed at 70.80 per dollar, down by 10 paise against its previous close.
The rupee had surged 48 paise to end at a one-month high of 70.70 against the U.S. dollar on Tuesday. In the last six trading sessions, the rupee had gained a hefty 110 paise.
“Dollar buying by the state-run banks on behalf of oil importers has dragged the rupee lower from the day’s high of 70.40,” HDFC Securities Head, PCG and Capital Markets Strategy, V.K. Sharma said.
Mr. Sharma further noted that crude oil prices are on an uptrend on expectation of lower supply by the Organization of the Petroleum Exporting Countries (OPEC) and this could also weigh on the domestic currency in the short term.
Brent crude, the global oil benchmark, was trading at $63.46 per barrel, higher by 1.67%.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.09% to 96.79.
Extending its fall for the fifth consecutive session, the BSE Sensex gave up early gains to end 120 points lower Wednesday. In similar movement, the NSE Nifty fell below 10,800 and settled 37.75 points, or 0.35%, lower at 10,793.65.
Foreign portfolio investors (FPIs) sold shares worth a net ₹676.63 crore, while domestic institutional investors (DIIs) bought equities to the tune of ₹713.10 crore on Wednesday, provisional data showed.
The Financial Benchmark India Private Ltd. (FBIL) set the reference rate for the rupee/dollar at 70.5547 and for rupee/euro at 79.9596. The reference rate for rupee/British pound was fixed at 91.1327 and for rupee/100 Japanese yen at 63.78.
