The rupee fell 65 paise to close at 82.73 (provisional) against the dollar on Monday, weighed down by a stronger dollar in overseas markets and weaker domestic stock markets.
Continued foreign capital outflows and firm crude oil prices further dented investor sentiment, currency traders said.
In the interbank foreign exchange market, the rupee opened at 82.35 per dollar before falling to an intraday low of 82.76. It finally closed at 82.73 (tentative), down 65 paise from the previous close.
In the previous session on Friday, the rupee settled at 82.08 per dollar.
The U.S. dollar index , which measures the greenback’s strength against a basket of six currencies, rose 0.24% to 103.16, as strong U.S. economic data raised expectations for a hawkish Fed.
Brent crude futures, the global oil benchmark, rose 0.45% to $80.30 a barrel.
Anuj Choudhary, research analyst at BNP Paribas Sharekhan, said the Indian rupee weakened on a rebound in the dollar and weakness in the domestic market.
“The dollar rose as strong U.S. economic data raised expectations for a hawkish Fed.
“Non-farm payrolls rose by 517,000 in January, beating expectations for 193,000, while the ISM Services PMI surged unexpectedly to 55.2 in January, well above expectations for 50.5. The unemployment rate fell to 3.4% in January, while the It was expected to be 3.6%.
“We expect the rupee to trade with a negative bias as a rally in the US dollar could weaken the local currency further. Weakness in domestic equities and FII outflows could also put downward pressure on the rupee,” Mr Choudhary said.
However, a weaker tone in crude oil prices may prevent the rupee from falling sharply. Market participants are likely to remain cautious ahead of the Reserve Bank of India’s monetary policy outcome on Wednesday.
“The USD/INR spot price is expected to trade between Rs 82 and Rs 83.30 in anticipation of a rate hike of 25 basis points to 6.5 percent,” Mr Choudhary said.
The 30-share BSE Sensex closed down 334.98 points or 0.55 percent at 60,506.90, while the broader NSE Nifty shed 89.45 points or 0.5 percent to 17,764.60.
Foreign institutional investors (FIIs) were net sellers in capital markets on Friday, selling shares worth Rs 932.44 crore, according to exchange data.
(This story was not edited by NDTV staff and was automatically generated from syndicated feeds.)
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