Mumbai, Feb 18: The rupee depreciated 8 paise to 86.96 against the US dollar in early trade on Tuesday, weighed down by sustained foreign fund outflows and a negative trend in domestic equities.
Forex traders said there is a negative bias for the USD/INR pair as foreign investors continue to sell domestic equities and the RBI support is tapering off slowly.
At the interbank foreign exchange, the rupee opened at 86.94 then fell further to 86.96 against the American currency, registering a decline of 8 paise over its previous close.
On Monday, the rupee depreciated 17 paise to close at 86.88 against the US dollar.
Traders said the central bank’s measures, coupled with the absence of anticipated US tariffs, have alleviated trade-related concerns, but despite this challenges persists on the domestic macroeconomic front.
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.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 106.90, higher by 0.31 per cent.
Brent crude, the global oil benchmark, was quoted 0.24 per cent higher at USD 75.40 per barrel in futures trade.
“The USD/INR pair is expected to trade within the 86.60–87.20 range. The 87.20 level is emerging as a strong resistance, while 86.50 serves as a critical support zone. A decisive breach below 86.50 could pave the way for 85.80–86.00 levels, adding to the rupee’s strength,” CR Forex Advisors MD-Amit Pabari said.
In the domestic equity market, the 30-share BSE Sensex was trading 30.11 points or 0.04 per cent down at 75,966.75 in morning trade, while Nifty was lower by 29.00 points or 0.13 per cent to 22,930.50.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,937.83 crore in the capital markets on net basis on Monday, according to exchange data.
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 here over Donald Trump’s return to the US presidency for a second term and his 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. (PTI)
