The Rupee paired all its early gains and settled with a steep loss of 20 paise at 83.49 (provisional) against the U.S. dollar on May 31 amid volatile domestic equity markets and unabated outflow of foreign funds.
Forex traders said increased month-end demand of greenback by oil marketing companies also weighed on the Indian currency even as it found some support due to lower level of crude oil prices.
At the interbank foreign exchange market, the local unit opened at 83.25 and oscillated between the intra-day high of 83.23 and lowest level of 83.49 during the session. It finally settled at 83.49 (provisional), registering a loss of 20 paise from its previous closing level. On May 30, Rupee gained 11 paise to close at 83.29 against the U.S. dollar.
Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas, said the Rupee depreciated on month-end dollar demand from oil marketing companies and importers.
“We expect Rupee to trade with a slight negative bias on overall strength in the U.S. dollar amid safe haven demand on the back of geopolitical tensions in the Middle East.”
“Volatility in the domestic markets amid uncertainty over election results may also put downside pressure on the Rupee. However, positive tone in global markets today may support the Rupee at lower levels,” Mr. Choudhary said.
Traders are expected to take cues from the upcoming domestic GDP data and fiscal deficit numbers and personal consumption expenditure price index from the U.S. “USD-INR spot price is expected to trade in a range of ₹83.10 to Rs 83.70,” Mr. Choudhary said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02% lower at 104.64.
According to analysts, U.S. dollar declined after the latest U.S. GDP data released on Thursday showed the world’s largest economy grew at a slower pace of 1.3% against the projected 1.6% in the January-March quarter. This triggered expectations of interest rate reduction by the Federal Reserve. Brent crude futures, the global oil benchmark, fell 0.44% to $81.50 per barrel.
On the domestic equity market, the 30-share BSE Sensex rose 75.71 points, or 0.10% to close at 73,961.31 points. The broader NSE Nifty went up 42.05 points or 0.19% to close at 22,530.70 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, selling shares worth ₹3,050.15 crore, according to exchange data.