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Rupee falls by 24 paise on strong dollar sentiment and high demand for greenback from importers

Mumbai: The rupee Wednesday declined by 24 paise to close at 69.86 against the US currency, weighed down by a strong dollar sentiment and high demand for the greenback from importers.

The domestic currency dropped to more than four-month low of 69.97 in the day trade in line with losses in other Asian currencies against the dollar after positive US economic data.

Foreign fund inflows and strong gains in equity markets helped the domestic currency reverse some of the losses before close.

"The broader US dollar is trading strong today, with most Asian currencies weaker against the greenback, which gained after strong US housing data dampened concerns about an economic slowdown in the world's largest economy.

"Oil prices fell marginally today but still remained at elevated levels. Rising crude and strong ICE Dollar Index have been the prime reasons for domestic currency's weakness," VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said.

At the Interbank Foreign Exchange (forex), the rupee opened sharply lower at 69.80 and further fell to a four-month low of 69.97, the lowest level since December 3, 2018, against the dollar. Intra-day, the unit touched a high of 69.75.

 Rupee falls by 24 paise on strong dollar sentiment and high demand for greenback from importers

Representational image. Reuters.

The domestic currency finally settled at 69.86 per dollar, down 24 paise over its previous closing. On Tuesday, the rupee had appreciated by 5 paise to close at 69.62 against the US dollar.

Global benchmark Brent crude declined by 0.20 percent to $74.36 per barrel.

The BSE Sensex soared to a high of 39,095.35 at the fag-end of the session. It finally settled 489.80 points or 1.27 percent, higher at 39,054.68.

The broader NSE Nifty too climbed 150.20 points, or 1.30 percent, to close at 11,726.15. It hit an intra-day high of 11,740.85.

The dollar index, which gauges the greenback's strength against a basket of six currencies, strengthened by 0.06 percent to 97.69.

Foreign institutional investors emerged as net buyers in the capital markets, putting in Rs 974.88 crore Wednesday, according to the provisional data.

"The Reserve Bank of India's (RBI's) second three-year dollar-rupee swap auction was a massive success like the first one, even as it took just five large bids to cover the entire $5 billion on offer.

"The second USD – INR sway auction received bids to exchange US dollars to Indian Rupees at $18.65 billion compared with the RBI's promise to take in $5 billion in its second such swap deal," Sharma said.

Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.9045 and for rupee/euro at 78.3322. The reference rate for rupee/British pound was fixed at 90.3460 and for rupee/100 Japanese yen at 62.53.

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Updated Date: Apr 24, 2019 18:46:43 IST