Mumbai, Feb 8 (PTI) The rupee edged lower by 5 paise to close at 74.74 against the US dollar on Tuesday as stronger greenback, elevated crude oil prices and foreign fund ouflows weighed on forex market sentiment.
At the interbank foreign exchange, the rupee opened at 74.65 a dollar and later touched an intra-day high of 74.57 and a low of 74.80.
The local unit finally ended the day at 74.74, down 5 paise from the previous close.
In the previous session on Friday, the rupee had settled at 74.69 against the greenback.
The forex market was closed on Monday as Maharashtra had declared February 7 as public holiday to mourn the demise of legendary singer Lata Mangeshkar.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.25 per cent higher at 95.63.
“The rupee depreciated against the dollar on importer covering and broad-based strength in dollar index. Dollar index gained after US yields soared amid prospects of faster policy normalisation by the Federal Reserve,” said Dilip Parmar, Research Analyst, HDFC Securities.
“There have been multiple factors like foreign fund outflows, higher crude oil prices, higher government borrowings and elevated inflation which are already adding pressure on the rupee. While there are few positive factors like higher forex reserves, better growth prospectus of the economy and expectation of good inflows in LIC IPO,” Parmar said.
Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said, “Rupee consolidated in a narrow range ahead of the important RBI policy statement that will be released later this week. Expectation is that the central bank could look to raise reverse repo rates and also maintain a hawkish stance.” “Market participants will be keenly keeping an eye on comments on inflation following the recent surge in global crude oil prices,” he added.
On the domestic equity market front, the Sensex ended 187.39 points or 0.33 per cent higher at 57,808.58, while the broader NSE Nifty settled up 53.15 points or 0.31 per cent at 17,266.75.
Global oil benchmark Brent crude futures fell 0.47 per cent to USD 92.95 per barrel.
Foreign institutional investors were net sellers in the capital market on Monday, as they offloaded shares worth Rs 1,157.23 crore, as per stock exchange data. PTI DRR MKJ
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