The Indian rupee declined 31 paise to close at 70.87 against the US dollar on Monday amid rising demand for the greenback vis-a-vis other currencies overseas, even as crude oil prices eased.
Forex traders said globally risk appetite has plunged as US-China trade concerns continue to linger. Besides, selling in domestic equities and unabated foreign fund outflows also weighed on the local unit.
At the interbank foreign exchange market, the rupee opened on a strong note at 70.37, then lost ground and fell to an intra-day low of 70.88 against the American currency.
However, it finally closed at 70.87 per US dollar, down 31 paise over its previous close.
“During early trades, rupee surged to 8-week high of 70.36, however, the gains got capped by RBI intervention,” Emkay Global Financial Services Currency Research Head Rahul Gupta said.
Gupta further said that “there is a possibility that US may curb investments in China. Thus, as we near October 10, any developments on US-China trade front will keep rupee under pressure.”
According to reports, US-China trade talks are set to resume from October 10.
Forex traders said the domestic unit is expected to trade in a narrow range this week ahead of the Reserve Bank’s policy review meet.
The central bank is scheduled to announce its next bi-monthly monetary policy on October 4.
Brent futures, the global oil benchmark, dropped 1.47 per cent to USD 61.00 per barrel.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.17 per cent to 99.27.
Foreign investors pulled out a net Rs 213.60 crore from Indian equities on Friday, according to exchange data.
In the domestic equity markets, the BSE Sensex tumbled 155.24 points or 0.40 per cent to finish at 38,667.33, while the broader NSE Nifty dropped 37.95 points or 0.33 per cent to 11,474.45.
The 10-year government bond yield was at 6.70 per cent.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.8381 and for rupee/euro at 77.3203. The reference rate for rupee/British pound was fixed at 87.3259 and for rupee/100 Japanese yen at 65.71.