The rupee pared initial gains and settled for the day 6 paise lower at 90.29 (provisional) against the US dollar on Wednesday, as the likely central bank intervention was negated by a strong dollar, foreign outflows from capital markets, and elevated crude oil prices.
Forex traders said the rupee is likely to trade with a negative bias on risk aversion in global markets and geopolitical tensions, however, rising odds of a rate cut amid softening inflation and any intervention by the central bank may support the rupee at lower levels.
At the interbank foreign exchange, the rupee opened at 90.26 and touched the intra-day low of 90.30 and a high of 89.94 against the greenback. The currency finally ended the session at 90.29 (provisional) against the dollar, down 6 paise from its previous close.
On Tuesday, the rupee declined 6 paise to close at 90.23 against the US dollar.
"Indian rupee gained in early trade on likely central bank intervention. However, a strong dollar, FII outflows and a late fall in the domestic markets capped sharp gains," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
Choudhary further added that "we expect the rupee to trade with negative bias on risk aversion in global markets and geopolitical tensions".
Traders now focus on the US Supreme Court ruling later in the day on the legality of the Liberation Day tariffs. USDINR spot price is expected to trade in a range of 89.95 to 90.50, he said.
Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.02 per cent lower at 99.11.
Brent crude, the global oil benchmark, was trading 1.04 per cent lower at USD 64.81 per barrel in futures trade.
On the domestic equity market front, the Sensex dropped 244.98 points to settle at 83,382.71, while the Nifty declined 66.70 points to 25,665.60.
Foreign institutional investors offloaded equities worth Rs 1,499.81 crore on Tuesday, according to exchange data.
Source Name : Economic Times