The rupee depreciated by 41 paise to close at 81.93 (provisional) against the US dollar on Tuesday after the Economic Survey 2022-23 said the domestic unit may remain under pressure on account of plateauing of exports and subsequent widening of current account deficit.
Significant foreign fund outflows, according to forex dealers, as well as a flat domestic equity market trend, dampened investor mood.
The native currency opened weakly against the dollar at the interbank foreign exchange, at 81.61, and lost ground to drop under the 82 per US dollar mark. The rupee eventually fell 41 paise from its previous level to conclude the day at 81.93.
The rupee experienced an intraday high of 81.58 and a low of 82.07 against the US dollar during the day.
The rupee's value versus the dollar was fixed at 81.52 in the previous session on Monday.
The dollar index, which measures the value of the dollar against a basket of six different currencies, increased 0.15 percent to 102.43.
Brent crude futures fell 1.18 percent to USD 83.90 per barrel, the global oil benchmark.
Forex traders said investors are bracing for interest rate decisions from the Federal Reserve, and the Union Budget for 2023-24, both scheduled to be announced on Wednesday.
The Indian rupee may remain under depreciation pressure on account of plateauing of exports and subsequent widening of the current account deficit, the Economic Survey said.
According to the latest Reserve Bank of India data, the country's current account deficit (CAD) increased to 4.4 percent of GDP in the quarter ended September from 2.2 percent in April-June due to a larger trade gap.
According to the survey, while commodity prices have retreated from record highs, they are still above the "pre-conflict" (Russia-Ukraine war) levels.
Strong domestic demand amid high commodity prices will raise India's total import bill and contribute to unfavourable developments in the current account balance, it said.
"These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure," said the key document released a day before presentation of Union Budget 2023-24.
The 30-share BSE Sensex was up 49.49 points, or 0.08 percent, at 59,549.90 on the domestic equity market. The NSE Nifty index as a whole increased by 13.20 points, or 0.07 percent, to 17,662.15.
According to exchange data, Foreign Institutional Investors (FIIs) sold shares worth Rs 6,792.80 crore on Monday, making them net sellers in the capital markets.
With inputs from Agencies.
