BackRupee falls 3 paise to end at 83.24 against US dollar
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.21% to 106.77.
PremiumThe rupee depreciated 3 paise against the US dollar on Wednesday, weighed down by a selloff in domestic equities and sustained foreign fund outflows. The local currency ended at 83.24 a dollar as against previous close of 83.21.
Forex traders said the strength of the American currency in the overseas market further dented investor sentiments.
On Tuesday, the rupee had settled 17 paise lower at 83.21 against the dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.21% to 106.77.
“The Indian rupee declined on weak domestic markets and further selling by FIIs. However, softening of US dollar cushioned the downside," said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.
Choudhary further said that the US dollar eased from a near 11-month high as investors are likely to narrow their positions ahead of US non-farm payrolls data later this week.
“We expect the rupee to trade with a negative bias amid risk aversion in global markets and a hawkish tone of most Federal Reserve officials," Choudhary said.
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However, softening of crude oil prices may cushion the downside.
“Any intervention by the RBI may also support rupee at lower levels. Traders may take cues from Services PMI, ADP non-farm employment and factory orders from the US," he said.
Market participants may remain cautious ahead of the Reserve Bank of India's monetary policy decision later this week.
The RBI governor-headed six-member Monetary Policy Committee (MPC) started its three-day meeting on Wednesday. Governor Shaktikanta Das will announce the decision on Friday.
Meanwhile, crude oil prices declined, limiting losses in the rupee.
Brent futures fell 1.78% to $89.30 a barrel, while US West Texas Intermediate (WTI) crude dropped 1.95% to $87.49 a barrel.
On the domestic front, the benchmark equity indices ended in the red on Wednesday, extending losses into the second consecutive session, amid a sharp rise in the US bond yields and dollar.
The 30-share BSE Sensex closed 286.06 points, or 0.44%, lower at 65,226.04, while the broader NSE Nifty declined 92.65 points, or 0.47%, to settle at 19,436.10.
On Tuesday, the Foreign institutional investors (FIIs) net sold Indian shares worth ₹2,034.14 crore, while Domestic Institutional Investors (DIIs) net purchased shares to the tune of ₹1,361.02 crore, as per provisional data available on the exchanges.
(With inputs from PTI)
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