Rupee falls by 12 paise to close at 81.70 against US dollar on firm crude oil prices

The 30-share BSE Sensex ended 562.75 points or 0.94 per cent higher at 60,655.72, while the broader NSE Nifty advanced 158.45 points or 0.89 per cent to 18,053.30.

The domestic currency finally settled at 81.70, down 12 paise over its previous close. (Representational Image)

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The rupee settled 12 paise lower at 81.70 against the US dollar on Tuesday, tracking a rebound in the greenback overseas and firm crude oil prices.

Forex traders said sustained foreign fund outflows further weighed on investor sentiment. At the interbank foreign exchange market, the rupee opened at 81.79 against the greenback, then lost ground and fell to an intra-day low of 81.89. The domestic currency finally settled at 81.70, down 12 paise over its previous close.

In the previous session on Monday, the rupee had settled at 81.58 against the US dollar. According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee fell for the second successive session as the dollar rebounded against its major crosses.

“Market participants remain cautious ahead of the Bank of Japan’s policy statement. Expectation is that the central bank could keep its commentary hawkish,” Somaiya said.

Somaiya further said that the US retail sales number will also be released and better-than-expected data could extend gains for the greenback.

“We expect the USDINR(Spot) to trade sideways with a positive bias and quote in the range of 81.40 and 82.05,” Somaiya said.

Jateen Trivedi, VP Research Analyst at LKP Securities said rupee traded weak on back of dollar index strength above USD 102.25 along with crude prices taking support at USD 80 in WTI.

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“Rupee weakness can continue if crude prices keep a positive rally. OPEC demand outlook in coming days will be keenly watched as further spike up in crude can weaken rupee towards 82.00 and beyond,” Trivedi said.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.19 per cent higher at 102.40. Global oil benchmark Brent crude futures advanced 0.46 per cent to USD 84.85 per barrel.

The 30-share BSE Sensex ended 562.75 points or 0.94 per cent higher at 60,655.72, while the broader NSE Nifty advanced 158.45 points or 0.89 per cent to 18,053.30. Foreign institutional investors (FIIs) turned net buyers in the capital markets on Tuesday as they purchased shares worth Rs 211 crore on net basis, according to exchange data.

Meanwhile, on the domestic macroeconomic front, India’s exports contracted 12.2 per cent to USD 34.48 billion in December 2022, mainly due to global headwinds, and the trade deficit widened to USD 23.76 billion.

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Imports last month also declined 3.5 per cent to USD 58.24 billion as against USD 60.33 billion in the year-ago period. In December 2021, exports stood at USD 39.27 billion and the trade deficit was at USD 21.06 billion.