Mumbai: The rupee depreciated by 12 paise to 83.56 against the US dollar in early trade on Tuesday, impacted by the strengthening of the American currency in overseas markets and elevated crude oil prices.
Forex traders noted that oil importers and foreign portfolio investors (FPIs) bought US dollars amid rising US yields, exerting downward pressure on the local currency.
At the interbank foreign exchange market, the rupee opened at 83.51 and further weakened to trade at 83.56 against the greenback in initial deals, marking a decline of 12 paise from its previous closing level.
On Monday, the rupee had depreciated by 10 paise, settling at 83.44 against the US dollar.
“The rupee saw dollar inflows and initially rose to 83.37 on Monday, but was subsequently sold off to 83.44 levels as oil importers and FPIs bought dollars due to rising US yields,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Bhansali predicted that the rupee might touch 83.55 on Tuesday before stabilizing around 83.45, with an expected narrow trading range of 83.40 to 83.55 for the day.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading at 105.91, up by 0.02 percent, driven by a surge in US treasury yields amid investor speculation about a potential second Trump presidency.
Brent crude futures, the global oil benchmark, advanced by 0.22 percent to USD 86.80 per barrel.
In the domestic equity market, benchmark indices Sensex and Nifty reached lifetime high levels in early trade. However, the indices pared initial gains and were trading in negative territory. The BSE Sensex was down 64.46 points, or 0.08 percent, at 79,411.73 points, while the broader NSE Nifty fell 25.55 points, or 0.11 percent, to 24,116.40 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, offloading shares worth Rs 426.03 crore, according to exchange data.
