Mumbai, Oct 19 (PTI) The rupee pared its initial gains and settled lower by 2 paise for the day at 94.91 against the US dollar on Monday, weighed down by a sharp fall in the domestic equity markets and a recovery in crude oil prices.
The rupee snapped its six-session winning streak and settled in the negative territory amid continued pressure from foreign institutional investor (FII) outflows and elevated crude oil prices.
At the interbank foreign exchange market, the rupee opened at 94.90 against the American currency. In intraday trade, it touched a high of 94.75 and a low of 94.97 against the American unit.
Eventually, it settled at 94.91 against the greenback, registering a loss of 2 paise from its previous close.
On Friday, the rupee stayed on an upward momentum for the sixth straight session and settled 10 paise higher at 94.89 against the US dollar, backed by the Reserve Bank of India’s measures to curb spot dollar demand.
During the week ended October 16, the Indian rupee appreciated approximately 2 per cent, supported by RBI’s measures to manage dollar demand.
“RBI measures may help stabilise short-term currency movements, but a sustainable recovery will depend on lower oil prices, improved foreign capital flows and easing external pressures,” said Gaurav Garg, Head – Research, Lemonn.
Garg further noted that though the rupee’s recovery is encouraging, its sustainability depends on whether global and domestic fundamentals improve alongside RBI support.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.09 per cent at 101.93.
Brent crude, the global oil benchmark, was trading lower by 1.17 per cent at USD 108.58 per barrel in futures trade.
“We expect the rupee to trade with a positive bias on overall weakness in the dollar and softening of US treasury yields. However, elevated crude oil prices and FII outflows may cap sharp upside,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
On the domestic equity market front, the Sensex tumbled 876.37 points to settle at 73,852.90, while the Nifty dropped 257.20 points to 22,888.95.
Foreign Institutional Investors (FIIs) sold equities worth Rs 1,148.64 crore on a net basis on Monday, according to exchange data.
Meanwhile, according to RBI data released on Friday, India’s foreign exchange reserves dropped USD 8.578 billion to USD 726.027 billion during the week ended October 9.
In the previous reporting week, the reserves had dropped by USD 12.952 billion to USD 734.606 billion. PTI DRR TRB
TRB
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