Rupee drops by 10 paise to 73.90 against US dollar

STATE TIMES NEWS

MUMBAI: The rupee dropped by 10 paise to settle at 73.90 against the US currency on Monday due to a rebound in the dollar in overseas markets following geopolitical concerns.
The dollar recovered from two-and-a-half-year low on Monday after reports that the US was preparing to impose sanctions on Chinese officials, increasing the risk of geopolitical tensions.
Concerns over a Brexit trade talks as the EU and the UK were still trying to address major differences to avoid a no-deal exit by year-end supported the dollar sentiment.
At the interbank forex market, the domestic unit witnessed a volatile trading session. It opened at 73.79 and rose to an intra-day high of 73.70 in the first half.
The local unit, however, lost momentum and dropped to a low of 73.96 before closing at 73.90 a dollar, registering a decline of 10 paise over its previous close of 73.80.
“The Indian rupee depreciated against the US currency due to likely intervention from the Reserve Bank of India and sharp rebound of the US Dollar Index in this Monday afternoon trade. The local unit initially was strong against the US dollar supported by hefty foreign equity inflows,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Iyer further noted that Asian currencies were broadly lower and that also weighed on sentiment.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.48 per cent to 91.13.
On the domestic equity market front, the BSE Sensex ended 347.42 points or 0.77 per cent higher at 45,426.97 while the broader NSE Nifty rose 97.20 points or 0.73 per cent to 13,355.75.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 2,969.59 crore on a net basis on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.79 per cent to USD 48.86 per barrel.
“The Indian currency opened substantially flat on Monday as the USD was pressurized in Asian trade after a lower-than-expected upsurge in non-farm payrolls in November which cemented prospects of a fresh stimulus package in the US,” Ankit Agarwal, Managing Director, Alankit Limited said.
Agarwal added that “globally, market players showed concerns on a report about the US preparing to impose sanctions on Chinese officials, increasing the risk of geopolitical tensions”.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee consolidated in the first half of the session but weakened in the latter half as the dollar strengthened against its major crosses.