Rupee falls 1 paisa to close at 85.59 against US dollar

MUMBAI: The rupee consolidated in a narrow range and settled for the day down by 1 paisa at 85.59 (provisional) against the US dollar on Wednesday, on dollar demand from importers and foreign banks as well as surge in crude oil prices.

Forex traders said market sentiment soured under pressure from rising US Treasury yields and persistent foreign fund outflows. However, positive domestic markets and a weak US dollar index cushioned the downside.

At the interbank foreign exchange, the domestic unit opened at 85.65 and moved between an intra-day high of 85.53 and a low of 85.70 against the greenback. The unit ended the session lower at 85.59 (provisional), registering a fall of 1 paisa over its previous closing level.

On Tuesday, the rupee depreciated 16 paise to close at 85.58 against the US dollar.

"We expect the rupee to trade with a negative bias on importer demand for dollar and geopolitical tensions in the Middle East. Elevated crude oil prices may also weigh on the rupee," said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.

However, rise in risk appetite in global markets amid easing trade war fears may support the rupee, Choudhary said, adding that USD-INR spot price is expected to trade in a range of 85.40 to 86.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.46 per cent at 99.66.

Brent crude, the global oil benchmark, rose 1.04 per cent to USD 66.06 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex advanced 410.19 points, or 0.51 per cent, to close at 81,596.63, while the Nifty rose 129.55 points, or 0.52 per cent, to 24,813.45.

Foreign institutional investors (FIIs) offloaded equities worth Rs 10,016.10 crore on a net basis on Tuesday, according to exchange data.