The Indian rupee came under pressure today, breached the crucial 71 mark against the US dollar. “There have been chunky outflows for the last two days. We are not sure what kind of outflows these are," Reuters quoted a foreign bank dealer as saying. In addition, there was no “intent visible from the RBI to defend any particular level", the dealer said. So far during the day, the rupee traded in the range of 70.74 and 71.02 against the US dollar, after opening at 70.75. The rupee had closed at 70.93 on Monday.

Here are 5 things to know about rupee-dollar trade today

1) Foreign funds pulled out 732.46 crore from the capital markets on a net basis, while domestic institutional investors purchased shares worth 527.49 crore on Monday, provisional data showed.

2) Data released yesterday showed retail inflation falling to 18-month low of 2.19% in December on account of lower food prices. But core inflation continues to remain elevated at 5.7%, mainly on account of higher education and healthcare costs. Weak November industrial data coupled with benign inflation is likely to strengthen the case for a RBI rate cut, forex advisory firm IFA Global said in a note.

3) Meanwhile, the rupee got support from strong domestic equities today with Sensex surging around 400 points. The Nifty reclaimed 10,850 level amid strong across-the-board buying.

4) Rupee has come under renewed pressure after global oil prices have rebounded from December lows on supply cuts by producer club OPEC and Russia. Oil prices are up nearly 20% since hitting an 18-month low in late December. Higher crude prices put pressure on India’s current account as well as fiscal deficit and thus hurts the rupee.

5) The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.546, down 0.06% from its previous close of 95.61.

(With Agency Inputs)

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