Rupee falls 8 paise to close at 87.66 against US dollar

MUMBAI: Rupee pared initial gains and settled for the day on a negative note, lower by 8 paise at 87.66 (provisional) against the US dollar on Monday, as it came under pressure due to continued dollar demand by importers and a rebound in crude oil prices.

Forex traders said the rupee pared initial gains on positive crude oil prices, dollar demand from importers and foreign fund outflows.

At the interbank foreign exchange, the domestic unit opened at 87.56 and moved in a range of 87.48 to 87.66 during the day before settling at 87.66 (provisional), lower by 8 paise from its previous close.

On Friday, the rupee pared its intra-day losses and ended flat at 87.58 against the US dollar.

"The Indian rupee opened higher on weak US dollar index and positive domestic markets. However, the rupee pared initial gains on positive crude oil prices and FII outflows," said Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan.

Choudhary further said that "we expect the rupee to trade with a negative bias amid uncertainty over trade tariff issues between India and US.

"Persistent FII outflows may also weigh on the domestic currency. However, weak US dollar may support the rupee at lower levels. Investors may remain cautious ahead of US inflation data this week. USD-INR spot price is expected to trade in a range of 87.35 to 88," he said.

Meanwhile, Brent crude prices rose 0.03 per cent to USD 66.61 per barrel in futures trade.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.10 per cent to 98.28.

Meanwhile, investors are in a wait-and-watch mode for the US and India CPI inflation and are also awaiting cues from the US-Russia talks on August 15.

India on Saturday welcomed next week's talks between US President Donald Trump and his Russian counterpart Vladimir Putin on the Ukraine war, and reaffirmed Prime Minister Narendra Modi's consistent position that it is not an "era of war".

India has been consistently calling for ending the Russia-Ukraine conflict through dialogue and diplomacy.

In the domestic equity market, Sensex jumped 746.29 points to settle at 80,604.08, while the Nifty climbed 221.75 points to close at 24,585.05.

Meanwhile, India's forex reserves dropped by USD 9.322 billion to USD 688.871 billion for the week ended August 1 in one of the highest declines in the recent past, the RBI data showed on Friday.

The overall reserves rose by USD 2.703 billion to USD 698.192 billion in the previous reporting week.

Foreign institutional investors (FIIs) turned net buyers after several days and purchased equities worth Rs 1,932.81 crore on Friday, according to exchange data.

Forex traders said uncertainty revolving around the trade war pressurised the rupee.

On August 6, the United States announced an additional 25 per cent tariff on all Indian imports, on top of an existing 25 per cent duty, taking the total duty to 50 per cent effective August 27.