MUMBAI, Dec 8: The rupee depreciated 14 paise to close at 90.09 (provisional) against the US dollar on Monday, as elevated crude oil prices and persistent foreign fund outflows dented investor sentiments.
Forex traders said multiple pressures, such as sustained importer demand for the American currency, foreign fund outflows from equities, and lingering uncertainty over the India-US trade deal, are keeping investor sentiment fragile.
At the interbank foreign exchange market, the rupee opened at 90.07, then gave up ground and fell to an intra-day low of 90.26 against the US dollar, down 31 paise from its previous close.
At the end of the trade on Monday, the rupee settled at 90.09 (provisional) against the greenback, down 14 paise over its previous close.
On Friday, the rupee settled at 89.95 against the US dollar, after the Reserve Bank of India cut the key policy interest rate for the first time in six months.
On Friday, Reserve Bank Governor Sanjay Malhotra said the central bank does not target any band for the rupee in the forex market, and allows the domestic currency to find its own correct level.
“We don’t target any price levels or any bands. We allow the markets to determine the prices. We believe that markets, especially in the long run, are very efficient. It’s a very deep market,” he said, while replying to a question on rupee depreciation at a post-monetary policy press meet on Friday.
Forex traders said investors’ focus has now shifted to the Fed’s policy outcome on December 9-10. Markets are placing nearly a 90 per cent probability on a rate cut next week.
Meanwhile, India and the United States will commence three-day talks on the first phase of their proposed bilateral trade agreement here from December 10.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 per cent lower at 98.98.
Brent crude, the global oil benchmark, was trading lower by 0.71 per cent at USD 63.28 per barrel in futures trade.
On the domestic equity market front, Sensex tanked 609.68 points to settle at 85,102.69, while the Nifty dropped 225.90 points to 25,960.55.
Foreign institutional investors sold equities worth Rs 438.90 crore on Friday, according to exchange data.
Meanwhile, India’s forex reserves dropped USD 1.877 billion to USD 686.227 billion during the week ended November 28, the RBI said on Friday.
In the previous reporting week, the overall reserves had declined by USD 4.472 billion to USD 688.104 billion. (PTI)
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