Rupee gains 13 paise to settle at 87.19 against US dollar

Mumbai, Mar 4 (PTI) The rupee rebounded from initial losses and settled with a gain of 13 paise at 87.19 against the US dollar on Tuesday on the back of a weak American currency index and a sharp fall in crude oil prices.

Forex traders said the gain in the local currency was capped due to a weak tone in the domestic equity markets and continued withdrawal of foreign capital.

At the interbank foreign exchange, the rupee witnessed high volatility. It opened at 87.38 and touched the intraday low of 84.40 against the greenback. The unit ended the session at 87.19 against the dollar, registering a gain of 13 paise from its previous closing level.

On Monday, the rupee settled with a gain of 5 paise at 87.32 against the US dollar.

Dilip Parmar, Research Analyst, HDFC Securities, said the rupee appreciated as the US dollar retreated against major currencies, and crude oil prices traded near three-month lows. Also, the decline in US Treasury yields has contributed to the weakening of the dollar in recent days.

"Foreign fund outflows and stable economic activity are sending mixed signals for the rupee. The currency is also reacting to movements in regional currencies. In the near term, USD/INR is expected to trade within the range of 86.80 to 87.70," Parmar said.

Anuj Choudhary - Research Analyst at Mirae Asset Sharekhan, said the rupee is expected to trade with negative bias on account of weakness in the domestic markets and continued FII outflows. Uncertainty over the trade tariff issue may further pressurise the rupee.

"However, weak crude oil prices and weak tone in the US dollar may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 87.10 to 87.60," Choudhary said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.40 per cent lower at 106.31.

"The US dollar fell on the ongoing trade tariff concerns and disappointing economic data from the US. ISM manufacturing PMI data fell to 50.3 in February vs 50.6 in January and forecast a rise to 50.9," Choudhary said.

Brent crude, the global oil benchmark, fell 1.49 per cent to USD 70.55 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex fell 96.01 points, or 0.13 per cent, to settle at 72,989.93, while the Nifty slipped 36.65 points, or 0.17 per cent, to close at 22,082.65 points.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,405.82 crore in the capital markets on a net basis on Tuesday, according to exchange data.

On the global front, President Donald Trump said on Monday that 25 per cent taxes on imports from Mexico and Canada would start on Tuesday.

Trump said that the tariffs are to force Mexico and Canada to step up their fight against fentanyl trafficking and stop illegal immigration. He wants to eliminate the US' trade imbalances and push more factories to relocate in the United States. PTI DRR HVA

Source: PTI