Currency watch: Rupee ends 12 paise lower at 85.92 against dollar; FPI outflows continue
Reserve Bank of India
stepped in to limit losses. The domestic unit had ended at 85.80 per dollar on Friday.
At the interbank foreign exchange market, the rupee opened at 85.96 and moved in a tight band of 85.92 to 86.05 during the day before closing at 85.92. The local unit briefly slipped past the 86 mark but recouped some ground later in the session, PTI reported.
Forex traders attributed the rupee's weakness to persistent foreign fund outflows, a stronger dollar index, and lack of progress in the proposed India-US bilateral trade agreement (BTA).
A fresh round of BTA talks began in Washington on Monday and will continue till Thursday.
'The Indian rupee again fell as India-US trade deal was yet to be seen, while US President Donald Trump applied tariffs on the EU and Mexico, two of its biggest trading partners. Dollar index rose and kept the rupee lower for the entire day while Asian currencies were slightly weaker,' said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
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Brent crude futures rose 1.56% to $71.46 per barrel, exerting additional pressure on the rupee. The dollar index was up 0.03% at 97.82.
Bhansali added, 'The Reserve Bank of India (RBI) was present to protect the rupee while FPIs, who were sellers of equity on Friday, were dollar buyers, keeping the rupee well bid for the whole day without any major correction. We expect the rupee to move between 85.75 and 86.25 on Tuesday as we await US CPI data.'
On the domestic equity front, the BSE Sensex declined 247.01 points to 82,253.46 while the NSE Nifty shed 67.55 points to close at 25,082.30.
Data from the commerce ministry showed wholesale price inflation (WPI) turned negative for the first time in 19 months, falling 0.13% in June on account of softening food and fuel prices and easing costs of manufactured products.
Meanwhile, foreign institutional investors (FIIs) pulled out Rs 1,614.32 crore from Indian equities on Monday, as per exchange data. India's forex reserves declined by $3.049 billion to $699.736 billion in the week ended July 4, according to RBI data released on Friday.
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