Mumbai, Jan 6 (PTI) The rupee snapped its four-day losing streak and appreciated by 12 paise to settle at 90.18 against the American currency on Tuesday, driven by foreign banks’ dollar supply and a tentative return of inflows from foreign funds.
Forex traders said weak domestic equity markets and geopolitical tensions between the US and Venezuela capped sharp gains for the domestic unit.
At the interbank foreign exchange, the rupee opened at 90.22 against the US dollar and traded in the range of 90.08-90.25 before settling at 90.18, up 12 paise from its previous close.
On Monday, the rupee closed 10 paise lower at 90.30 against the US dollar.
“The Indian rupee appreciated after four days of fall, largely a tactical move driven by foreign bank dollar supply and a tentative return of inflows from foreign funds. However, the currency remains vulnerable to the structural mismatch between dollar demand from importers and limited supply,” said Dilip Parmar, Senior Research Analyst, HDFC Securities.
Looking ahead, the market is waiting for a clear signal from either the RBI or a breakthrough in global trade discussions. The RBI is set to conduct a massive USD 10 billion Buy/Sell USDINR Swap to alleviate domestic liquidity tightness.
“The trend remains neutral-to-bullish for the spot USDINR as long as the spot remains above 89.90,” Parmar added.
According to Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan, the rupee is likely to trade with a negative bias amid risk aversion in global markets driven by geopolitical tensions between the US and Venezuela. Surge in crude oil prices and FII outflows may further pressurise the rupee.
However, a weak Dollar amid disappointing US economic data, along with any intervention by the RBI, may support the rupee at lower levels, Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.18 per cent higher at 98.44.
Brent crude, the global oil benchmark, was trading 0.73 per cent higher at USD 62.21 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex declined 376.28 points to settle at 85,063.34, while the Nifty was down 71.60 points to 26,178.70.
Foreign institutional investors offloaded equities worth Rs 107.63 crore on Tuesday, according to exchange data.
On the domestic macroeconomic front, India’s services sector growth moderated in December, as the rates of expansion in incoming new work and output eased to the slowest in 11 months, and companies refrained from recruiting additional staff, a monthly survey said on Tuesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.8 in November to 58.0 in December, indicating the slowest rate of expansion since January 2025. PTI TRB DRR
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