Mumbai: The rupee on Tuesday closed 8 paise lower at 76.62 against the US dollar, marking its third day of losses on sustained foreign currency outflows, concerns over inflation and expectations of a rate hike by the US Federal Reserve.
Besides, heavy selling in domestic equities also weighed on the domestic unit, forex traders said.
He said the market remained bullish due to uncertainty over the conflict in Ukraine and a possible hike in interest rates by the US Federal Reserve on Wednesday.
In the interbank foreign exchange market, the rupee opened with strength at 76.40 against the US dollar. However, it cut gains later to enter negative territory as investors became cautious amid intensifying Russia-Ukraine conflict. It remained in the range of 76.32 and 76.68 during the day.
The local unit closed at 76.62 against the dollar, down 8 paise from its previous close. The rupee has declined 0.25 per cent in the three sessions till Tuesday.
“Despite the fall in crude oil prices, rupee has remained muted over the past two days as market participants await the outcome of the FOMC meeting. US bond yields rise ahead of Fed meeting, as markets rise 25 bps , which supported the broad- dollar strengthening,” said Dilip Parmar, Research Analyst, HDFC Securities.
The focus will be on the US Fed’s statements on the impact of future rate hikes and geopolitical uncertainty on inflation and growth, he said.
Parmar said that the spot USD/INR is expected to oscillate between 76.30 and 76.85 with a bullish trend in the medium term.
Jatin Trivedi, Senior Research Analyst, LKP Securities, said the currency market is waiting for the trigger from the Fed’s policy meeting on March 16. A neutral trend will strengthen the rupee while any bullish signal may impact the rupee negatively.
Trivedi said, “Selling in crude oil prices has strengthened the rupee, but rising inflation has kept the pressure under pressure with expected hikes from the US Fed meeting. The rupee saw limited gains despite the fall in crude oil prices.” Is.”
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.31 per cent lower at 98.71.
On the domestic equity market front, the 30-share Sensex ended 709.17 points or 1.26 per cent lower at 55,776.85, while the broader NSE Nifty ended 208.30 points or 1.23 per cent higher at 16,663.
Meanwhile, global oil benchmark Brent crude futures slipped 5.36 per cent to $101.17 a barrel.
Foreign institutional investors continued their sell-off in the Indian markets as they sold shares worth Rs 176.52 crore on a net basis on Monday, according to exchange data.