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Rupee Pares Losses To Close Flat At 73.34 On Dollar Sale By Exporters

The rupee later cut losses and finally ended at 73.34, registering a rise of 1 paisa over its previous close of 73.35 against the US dollar.

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The rupee recovered from early lows to close almost flat at 73.34 against the US currency on Tuesday on the back of dollar sales by exporters and weak crude oil prices.

Forex traders said concerns over rising COVID-19 cases and losses in the domestic stock markets, however, weighed on the local unit.

At the interbank forex market, the rupee opened lower at 73.47 against the greenback and declined to the day's low of 73.53 in line with a fall in other Asian currencies.

The rupee later cut losses and finally ended at 73.34, registering a rise of 1 paisa over its previous close of 73.35 against the US dollar.

'The Indian rupee ended steady against the US Dollar as exporters' dollar sales offset the impact of a weak risk appetite in the region,' said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The rupee had dropped in early session tracking a decline in most Asian currencies which were weighed down by concerns over rising US inflation expectations, Iyer noted.

India's government bond yields settled little changed for the second consecutive session on a lack of fresh cues, he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07 per cent to 90.14.

On the domestic equity market front, the BSE Sensex ended 340.60 points or 0.69 per cent lower at 49,161.81, while the broader NSE Nifty declined 91.60 points or 0.61 per cent to 14,850.75.

Forex traders said concerns over rising COVID-19 cases weighed on investors' sentiment.

New cases of coronavirus in India fell to 3.29 lakh after 14 days taking the total tally of COVID-19 infections to 2,29,92,517, according to the Union Health Ministry data updated on Tuesday.

Foreign institutional investors (FIIs) remained net buyers in the capital markets, as they purchased shares worth Rs 583.69 crore on Monday, as per provisional data.

Brent crude futures, the global oil benchmark, fell 0.66 per cent to USD 67.87 per barrel. According to Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking, the rupee has remained fairly anchored in the past couple of days supported by strong gains in the domestic equities and softness in the American currency.

'Going ahead, CPI data from the US shall be closely watched for any change in the stance by the US Fed. However, the sharp spike in COVID cases in the country amid the second wave has once again raised uncertainty and is a big drag on the growth prospects,' Sachdeva said.

S&P Global Ratings has already revised India's GDP growth forecast to 9.8 per cent from previous estimates of 11 per cent for the FY22.

'Considering the landscape, we envisage the rupee to face a hurdle around the key 73.20 mark. Only in the case that is breached, further upside looks likely for the Indian rupee else the room is open for depreciation all over again,' Sachdeva said. 

(PTI)