The rupee tumbled 23 paise to close at 74.06 against the US dollar on Tuesday amid a lacklustre trend in domestic equities and strengthening of the American currency in the overseas market.
At the interbank foreign exchange market, the local currency opened at 73.79 and witnessed an intra-day high of 73.73 and a low of 74.12 against the US dollar in day trade.
The local unit finally settled at 74.06 a dollar, down 23 paise over its previous close. On Monday, the rupee had settled at 73.83 against the US dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.26 per cent higher at 93.62.
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd., said, "The spot rupee closed at the highest level in a month at 74.04 against the dollar on the back of a sharp rise in US treasury bond yields and Brent crude oil prices. Brent crude is trading at the highest level since October 2018 and TSY yields are at the highest levels since June 2021. The twin developments of Fed turning hawkish and rising oil prices are pushing yields higher. Higher yields and higher oil prices are double negative for the Rupee, as it can trigger outflows. Over the near term the rupee could trade within a range of 73.70-74.70 with a slightly upward bias."
According to Dilip Parmar, Research Analyst, HDFC Securities the Indian rupee depreciated following global risk-off moods tracking cues from a sharp surge in bond yields ahead of Fed Powell’s testimony.
"The rise in global bond yields is likely to support safe-haven currencies as Powell may flag "upside risks" to inflation in his testimony. Looking ahead, a light data docket awaits, highlighted by the latest US consumer confidence figures, while Fed Chair Powell heads to Capitol Hill," Parmar was cited having said by PTI.
Meanwhile, Brent crude futures, the global oil benchmark, advanced 0.89 per cent to $80.24 per barrel.
On the domestic equity market front, the BSE Sensex ended 410.28 points or 0.68 per cent lower at 59,667.60, while the broader NSE Nifty declined 106.50 points or 0.6 per cent to 17,748.60.
Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 594.63 crore, as per exchange data.
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