Mumbai, Aug 6 (PTI) The rupee recovered from its all-time low level and settled for the day 17 paise higher at 83.92 against the US dollar on Tuesday, on suspected intervention by the Reserve Bank.
Forex traders said mixed to weak global equities on rising concerns over recession fears in the US and the geopolitical tensions in the Middle East dented investor sentiments.
Moreover, the sentimental impact of unwinding of the Yen carry-trade weighed on the riskier currencies such as the rupee. However, suspected intervention by the Reserve Bank supported the local unit.
At the interbank foreign exchange market, the local unit opened at 83.92 and touched an intra-day high of 83.84 and a low of 83.97 against the dollar during the session.
It finally settled at 83.92 against the American currency, up 17 paise from its previous close.
On Monday, the rupee slumped 37 paise to settle at an all-time low of 84.09 against the US dollar.
“We expect the rupee to trade with a negative bias on risk aversion in the global markets, amid geopolitical tensions in the Middle East and rising risk of recession in the US which may lead to outflows by foreign investors. However, overall weakness in the US dollar and declining crude oil prices may support the rupee at lower levels.
“Any further intervention by the RBI may also support the rupee. Traders may take cues from trade balance data from the US. Investors may watch out for RBI’s monetary policy decision this week. USD-INR spot price is expected to trade in a range of Rs 83.75 to Rs 84.20,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.37 per cent to 103.07 points.
Brent crude, the global oil benchmark, was trading 0.17 per cent lower at USD 76.17 per barrel in futures trade, on fears of spreading Middle East conflict that could hit supplies, outweighing fears of a possible US recession that could hurt demand in the world’s biggest oil consumer.
In the domestic equity market, the 30-share BSE Sensex fell 166.33 points, or 0.21 per cent, to cost at 78,593.07 points, while the Nifty declined by 63.05 points, or 0.26 per cent, to 23,992.55 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 3,531.24 crore, according to exchange data.
“…FPIs continued to move out money from the country citing overvaluation of stocks. The rupee is expected to be in a range of 83.85/84.05 tomorrow with buying of dollar expected to continue and RBI supporting rupee at a particular level,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP. PTI DRR HVA
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