The rupee on Tuesday slipped further by 16 paise to a fresh two-week low of 68.03 against the US dollar, following a sudden rise in the dollar’s value against other global currencies. The Sensex also ended at a fresh two-week low of 26,307.98 and the Nifty slipped below the key 8,100-mark amid capital outflows and demonetisation issues.
The Indian currency opened a tad higher at 67.86 as compared to Monday’s closing value of 67.87 and gained further ground to 67.81 on fresh dollar selling by exporters.
However, the rupee trimmed its initial gains and kept drifting to hit an intra-day low of 68.07 before ending at 68.03, revealing a fall of 16 paise, or 0.24 per cent.
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Analysts said sustained dollar demand from importers and corporates alongside heavy capital outflows largely kept domestic unit under pressure for the second straight day. The dollar regained its buoyant strength after a brief sideways movement following overnight US Federal Reserve’s optimistic tone about the future of the US economy and also expectations of further rate hikes faster than initially expected. Further, fresh geopolitical unease on the back of attacks in Germany and Turkey on Monday also added some amount of volatility in the currency market, a dealer commented.
On the other hand, foreign Institutional Investors continued their relentless selling in domestic equities and sold worth Rs 535.77 crore on Monday, as per the provisional data. This is the weakest close since December 5 when it had closed at 68.21 against the dollar.
The rupee rebounded smartly against the pound sterling to finish at 84.04 from 84.32 and strengthened against the euro to settle at 70.60 as compared to overnight level of 70.84.
The Bank of Japan (BoJ), kept monetary policy steady and offered a brighter view of the economy. There were geopolitical worries following deadly attacks in Europe.
The Sensex dropped another 66.72 points, or 0.25 per cent, to end at 26,307.98 — its lowest closing since December 7. It moved between 26,435.56 and 26,241.43 on Tuesday. The gauge had lost 323.12 points in the previous four sessions.
The 50-share NSE Nifty below the 8,100 mark to close lower by 21.95 points, or 0.27 per cent, to end at 8,082.40, after shuttling between 8,124.10 and 8,062.75.
“Though the finance minister announced relief measures for small traders, markets were seen eyeing the cascading effect of demonetisation,” said Anand James, chief market strategist, Geojit BNP Paribas Financial Services. FIIs preferred to keep their volume lower in view of approaching year-end holiday season as they pulled out funds from emerging markets, traders said.