On Monday, the Indian rupee had closed at 73.83 against the US dollar.
The rupee on Tuesday lost 23 paise to close at 74.06 against the US dollar as weak Asian peers and heavy selling in domestic equities weighed on investor sentiment.
Apart from this, rising crude oil prices also put pressure on the rupee.
At the interbank forex market, the local currency opened at 73.79 and saw intra-day highs of 73.73 and 74.12 lows against the US dollar in the day’s trade.
The local unit finally closed at $74.06 per dollar, down 23 paise from its previous close.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.26% higher at 93.62.
According to Dilip Parmar, Research Analyst at HDFC Securities, the Indian rupee depreciated following global risk-off mood tracking cues from a sharp jump in bond yields ahead of Fed Powell’s testimony.
“Rise in global bond yields is likely to support safe-haven currencies as Powell may mark an “upside risk” to inflation in his testimony. Looking ahead, a lighter data docket awaits, the latest US consumer sentiment.” Confidence is highlighted by the data, while Fed Chair Powell moves to Capitol Hill,” Mr Parmar said.
Meanwhile, global oil benchmark Brent crude futures rose 0.89% to $80.24 a barrel.
On the domestic equity market front, the BSE Sensex ended 410.28 points or 0.68% lower at 59,667.60, while the broader NSE Nifty ended 106.50 points or 0.6% lower at 17,748.60.
“The Indian rupee on Tuesday extended losses for the third consecutive session against the dollar after a further rise in US Treasury yields and a rise in crude oil prices for the long term,” said Sriram Iyer, Senior Research Analyst, Reliance Securities.
Emerging markets and most Asian currencies also weakened this Tuesday, while weakness in local equities also weighed on the local unit.
In overseas markets, the US dollar index rose in Asia this afternoon, tracking a rise in bond yields.
US Treasury yields rose on Monday after three Fed officials strengthened expectations that the US central bank will begin to ease bond buying momentum at its November meeting.
Jatin Trivedi, Senior Research Analyst, LKP Securities said, “Weak trading in the rupee mainly led to selling in financials and IT in the capital markets. The rupee weakened below 74.00 as crude and natural gas prices hit new highs. ” Weak trend in rupee may continue in future also.
Foreign institutional investors were net sellers in the capital markets on Monday as they sold shares worth Rs 594.63 crore, according to exchange data.
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