Mumbai, Oct 23 (PTI) The rupee settled almost flat at 84.07 against the US dollar on Wednesday amid a stronger American currency and relentless outflow of foreign funds.
Forex traders said the lacklustre sentiment in domestic equity markets and volatile geopolitics ahead of the US Presidential election kept investors on the sidelines.
At the interbank foreign exchange market, the domestic unit opened at 84.07 against the greenback and traded in a narrow range throughout the session. The unit finally settled at 84.07 against the dollar, up by 1 paisa over the last close.
On Tuesday, the rupee had settled at 84.08 against the US dollar.
The local currency has been struggling to recover since October 11, when it closed at its lowest level of 84.10 against the dollar.
According to analysts, the rupee has been under pressure due to the selling rush by foreign investors in pursuit of better gains from the Chinese market.
Also, they said, the US treasury yields surging to record levels raised concerns that the Federal Reserve may slow down its rate cut move, steering investors towards safe-haven assets.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas said, the rupee traded on a flat note amid strong US dollar and rising US treasury yields. The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.28 per cent to 104.19.
He said the dollar strengthened amid uncertainty over US Presidential elections, while bond yields surged on the possibility of a rise in US fiscal deficit.
IMF’s global growth forecast of 3.2 per cent, slower than its previous projection of 3.2 per cent, also impacted investor sentiment.
Choudhary further added that investors may take cues from PMI data from the US this week. “USD-INR spot price is expected to trade in a range of 83.90 to 84.30,” he said.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said, “Crude prices showed slight weakness, but foreign institutional investors continued to sell in Indian markets, maintaining pressure on the rupee. With sustained selling by FIIs, the rupee’s movement is likely to remain under pressure. Support in rupee is near 84.15-84.20 resistance at 83.85-83.90.” Meanwhile, Brent crude, the international benchmark, fell 1.17 per cent to USD 75.15 per barrel in futures trade.
On the domestic equity market front, Sensex declined 138.74 points, or 0.17 per cent, to settle at 80,081.98 points. The Nifty also fell 36.60 points, or 0.15 per cent, to 24,435.50 points. Both the indices closed sharply lower by more than 1 per cent on Tuesday.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 3,978.61 crore, according to exchange data. PTI HVA MR MR
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