Rupee declines 10 paise to close at 86.98 against US dollar

Mumbai, Feb 18 (PTI) Rupee depreciated 10 paise to close at 86.98 against US dollar on Tuesday weighed down by an uptick in the American currency index and rising crude oil prices.

Forex traders said there is a negative bias for the USD/INR pair as the RBI support is tapering off slowly.

At the interbank foreign exchange, the rupee opened at 86.94 and touched the high of 86.91 against the greenback during intraday. It ended the session at day's low of 86.98 against the dollar, logging a loss of 10 paise from previous close.

On Monday, the rupee depreciated 17 paise to close at 86.88 against the US dollar.

Traders said disappointing trade deficit data from the domestic macroeconomic front also pressurised the rupee.

India's exports declined for the third month in a row in January, falling by 2.38 per cent year-on-year to USD 36.43 billion, while the trade deficit widened to USD 22.99 billion in the month.

Imports rose by 10.28 per cent year-on-year to USD 59.42 billion in January due to an increase in gold shipments, according to the Commerce Ministry data.

"Indian rupee declined today on weak domestic markets and a slight uptick in the US dollar index. Disappointing trade deficit data from the domestic markets too pressurised the rupee," said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 106.95, higher by 0.35 per cent.

Brent crude, the global oil benchmark, was quoted 0.77 per cent higher at USD 75.80 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex declined 29.47 points, or 0.04 per cent, to settle at 75,967.39, while the Nifty fell 14.20 points, or 0.06 per cent, to 22,945.30 points.

On the global front, Chinese President Xi Jinping on Monday asked business leaders to unleash their talents in a rare meeting with billionaires including Jack Ma, founder of e-commerce giant Alibaba, in a bid to shore up sagging business confidence and reverse economic slowdown.

The meeting came amid concerns over Donald Trump's decision to hike tariffs against Chinese exports to the US amid the slowdown of the Chinese economy, which hovered at around 5 per cent GDP growth in the last few years.

Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said despite a recovery in the US dollar and concerns over a potential global trade war sparked by US tariff threats, the Reserve Bank of India (RBI) intervention could limit further INR depreciation.

"Analysts forecast a negative bias for the rupee, with a potential rebound if RBI continues its market intervention. The widening trade deficit, which reached USD 22.99 billion in January, also contributed to the INR's vulnerability," he said, adding that Wednesday's rupee range is expected between 86.75 and 87.25 as traders await Trump speech and US-Russia summit to end the war. PTI DRR HVA

Source: PTI