The rupee on Tuesday rose marginally by 2 paise to close at 69.72 against the US dollar in a lacklustre trade as participants preferred to sit on the fence ahead of the results of general polls.
A strengthening US dollar in overseas markets, weak domestic equity markets, and surging crude prices weighed on the trading sentiment, forex dealers said.
At the interbank foreign exchange, the domestic unit opened slightly lower at 69.75 and fell further to touch the day’s low of 69.81 in line with weak equity markets.
Backed by foreign fund inflows, the local currency made a recovery later to touch the day’s high of 69.66 before settling at 69.72, registering a rise of 2 paise over its previous close.
The rupee had appreciated 49 paise to 69.74 against the US dollar in the previous session.
“Indian rupee consolidates in small range of 69.76 to 69.66 in today’s session as market participants are now looking forward to the actual election results after a surge in equity and bond prices. Month end dollar demand from importers is expected to come amid higher crude oil prices. This could put pressure on domestic currency,” said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
A report by Goldman Sachs suggested that the USD/INR would trade near the 69 level in the next three months if the official election outcome bear out the exit poll trends.
Bond prices also eased Tuesday with the yield of the benchmark 10-year government securities inching upward to 7.30.
The US currency was trading strong in overseas market as the dollar index was up by 0.13 per cent to 98.06 against its six global rivals.
The 30-share index ended 382.87 points, or 0.97 per cent, lower at 38,969.80. The gauge hit the day’s low of 38,884.85. The broader NSE Nifty plunged 119.15 points, or 1.01 per cent, to 11,709.10.
Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 1,185.44 crore on Tuesday, provisional exchange data showed.
Brent crude, the global benchmark, was trading at 72.28 per barrel higher by 0.43 per cent. Oil prices surged after major producers assured that supplies were sufficient, but gains were capped due to China-US tensions.
Meanwhile, the Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 69.5466 and for rupee/euro at 77.5658. The reference rate for rupee/British pound was fixed at 88.5426 and for rupee/100 Japanese yen at 63.14.