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The rupee declined 13 paise to close at 83.16 (provisional) against the US dollar on Wednesday, weighed down by a strong American currency against major rivals overseas and elevated crude oil prices.
However, a recovery in domestic equity markets and foreign fund inflows cushioned the downside, forex traders said.
At the interbank foreign exchange market, the local unit opened at 83 and touched the intraday low of 83.17 against the greenback. The local unit finally settled at 83.16 (provisional) against the dollar, registering a loss of 13 paise from its previous close.
On Tuesday, the rupee depreciated 13 paise to 83.03 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.28 per cent higher at 104.11.
"The US Dollar strengthened on the weak Euro and Pound after disappointing inflation data. German PPI declined by 0.4 per cent in February 2024 vs forecast of (-) 0.1 per cent," said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.
Brent crude futures, the global oil benchmark, fell 0.78 per cent to USD 86.70 per barrel.
"We expect the rupee to trade with a negative bias on the strong US Dollar and expectations of a bounce back in crude oil prices. However, positive global equities may support the domestic currency.
- Also read: Robust domestic fundamentals and global macro landscape supportive of a stronger rupee: BoB report
"Traders will watch out for the Federal Open Market Committee (FOMC) meeting outcome. Markets expect the monetary policy to remain unchanged but will look forward to Fed Chair Jerome Powell's speech for further guidance and Fed's Dot plot," Choudhary added.
USD/INR spot price is likely to trade in a range of ₹82.90 to Rs 83.40, he said.
On the domestic equity market front, Sensex advanced 89.64 points, or 0.12 per cent, to settle at 72,101.69. The Nifty rose 21.65 points, or 0.1 per cent, to close at 21,839.10.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth ₹1,421.48 crore, according to exchange data.
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