Mumbai: Extending losses for the second straight session, the rupee on Tuesday fell by another 28 paise to end at 72.90 against the US currency due to dollar buying by banks and higher crude oil prices.
The rupee opened on a marginally positive note at 72.57 per dollar as against its previous close of 72.62 at the interbank foreign exchange market. It hovered in the range of 72.54 to 72.94 per dollar during the day before ending at 72.90.
The domestic currency has lost 45 paise in the two trading sessions to Tuesday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.01 per cent to 89.83.
“Rupee depreciated for the second day in a row and underperformed among Asian currencies amid foreign banks’ dollar buying and higher crude oil prices raising concerns for higher import bills,” said Dilip Parmar, Research Analyst, HDFC Securities.
India’s petroleum product imports accounts for 80 per cent of its need.
Going ahead, RBI policy decision will be on investor radars this weekend after below expectation manufacturing PMI numbers.
“However, market don’t expect any change in rate from central bank but look for the inflation outlooks as they given more importance to growth last meets,” Parmar said.
India’s manufacturing sector activity witnessed a significant loss of growth momentum in May. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI), fell to 50.8 in May, down from 55.5 in April, as companies observed the slowest rises in new work and output in ten months amid intensification of the COVID-19 crisis.
On the domestic equity market front, the BSE Sensex ended 2.56 points lower at 51,934.88, while the broader NSE Nifty fell 7.95 points or 0.05 per cent to close at 15,574.85.
Brent crude futures, the global oil benchmark, rose 2.02 per cent to USD 70.72 per barrel.
Foreign institutional investors were net buyers in the capital market on Monday as they purchased shares worth Rs 2,412.39 crore, as per exchange data.
Sophie Altermatt, Economist, Julius Baer, said, “On the currency front, the shock caused by the second wave appears to have been well digested. The INR has fully recovered from its April losses in May as risk sentiment rose on the back of declining new daily COVID-19 cases.”
“The path ahead might be more bumpy as uncertainties around the development of the pandemic situation and the economic recovery could reverse some of the INR strength and keep volatility elevated in the near term. We maintain a Neutral view on the INR.”
Meanwhile, India reported 1,27,510 fresh COVID-19 cases, the lowest in 54 days, while the daily positivity rate dropped to 6.62 per cent, according to the Union Health Ministry data updated on Tuesday.
According to Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee came under pressure against the US dollar for the second successive session on suspected RBI intervention and short covering move after sharp appreciation seen in the last few weeks.