Rupee falls by 16 paise to 86.95 against dollar, snaps 3-day winning run

Mumbai, Feb 12 (PTI) Snapping its three-day gaining streak, the rupee declined by 16 paise to close at 86.95 against the US dollar on Wednesday due to a firm American currency and unending outflow of foreign funds.

According to forex traders, the rupee traded firm initially but lost grounds amid volatile domestic equity markets.

The rupee opened strong amid easing crude oil prices and hit the day's high of 86.36 to a dollar. The unit lost momentum later due to losses in stock markets and FPI outlfows and hit a low of 86.95 against the greenback.

The domestic unit closed at the day's low of 86.95 against the dollar, registering a fall of 16 paise from its previous close. On Tuesday, the rupee appreciated 66 paise, logging the maximum single-day gain since March 3, 2023, to close at 86.79 against the US dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee rallied in early trades on intervention by the Reserve Bank of India. However, it lost gains on a weak tone in the domestic markets and a recovery in the US dollar index.

Choudhary said the rupee is expected to trade with a negative bias amid weakness in the domestic equities and persistent FII outflows. "Traders may take cues from inflation data from the US and India. USD-INR spot price is expected to trade in a range of Rs 86.50 to Rs 87.30." Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said rupee traded highly volatile as an initial strong opening was met with selling pressure.

"The early strength was largely driven by short covering, but weakness quickly emerged, limiting gains," he said, adding that the market participants were focused on the US CPI data, which will shape sentiment around interest rate expectations and capital flows.

The rupee's expected trading range between 86.25 - 86.95, he said.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent higher at 107.87.

The elevated level of dollar index was attributed to escalating trade tensions after the US imposed 25 per cent tariffs on aluminium and steel imports into the country.

Brent crude, the global oil benchmark, dropped 0.92 per cent to USD 76.29 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex declined 122.52 points, or 0.16 per cent, to settle at 76,171.08, while the Nifty fell 26.55 points, or 0.12 per cent, to 23,045.25 points.

Foreign institutional investors (FIIs) offloaded equities worth Rs 4,969.30 crore on net basis on Wednesday, according to exchange data. PTI HVA MR MR

Source: PTI