Rupee falls 12 paise to close at 87.59 against US dollar
PTI
Mumbai, Aug 14 (PTI) Rupee pared initial gains and settled for the day on a negative note, lower by 12 paise at 87.59 against the US dollar on Thursday, as it came under pressure due to continued dollar demand from importers.
Forex traders said the rupee pared initial gains on positive crude oil prices, dollar demand from importers and foreign fund outflows.
Moreover, there is an overall negative bias amid uncertainties over the trade tariff issue between India and the US.
At the interbank foreign exchange, the domestic unit opened at 87.48 and moved in a range of 87.39 to 87.67 during the day before settling at 87.59, lower by 12 paise from its previous close.
On Wednesday, the rupee appreciated 16 paise to close at 87.47 against the US dollar.
According to analysts, investors are in a wait-and-watch mode ahead of the US-Russia talks on August 15.
Maneesh Sharma, AVP – Commodities & Currencies, Anand Rathi Shares and Stock Brokers, said the rupee showed marginal weakness as traders awaited the the US and Russia meet outcome with near-term implied volatility at its one-month lows and option pricing showed lesser bias toward rupee weakness. One-month implied volatility on the dollar rupee front stood at 4.35 per cent, the lowest this month.
'Expectations remain for the rupee to trade with a positive bias on risk sentiments in the global market and a weakening US dollar. Softening inflation and declining crude oil prices may further support the domestic currency," Sharma said.
Meanwhile, Brent crude prices rose 0.49 per cent to USD 65.95 per barrel in futures trade as it regained ground after falling much more in the previous session, with the upcoming US-Russia talks raising risk premiums in the market.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.02 per cent to 97.82.
In the domestic equity market, Sensex climbed 57.75 points to settle at 80,597.66, while the Nifty closed 11.95 points up at 24,631.30.
Foreign Institutional Investors offloaded equities worth Rs 1,926.76 crore on Thursday, according to exchange data.
On the domestic macroeconomic front, S&P on Thursday upgraded India's sovereign credit rating to 'BBB' with a stable outlook after a gap of nearly 19 years, citing robust economic growth, political commitment for fiscal consolidation and 'conducive' monetary policy to check inflation.
The impact of US tariffs on the Indian economy will be 'manageable", S&P said, adding that a 50 per cent tariff on US exports (if imposed) will not pose a 'material drag" on growth.
'India is relatively less reliant on trade and about 60 per cent of its economic growth stems from domestic consumption," it said.
The rating upgrade by a US-based agency comes days after American President Donald Trump dubbed India as a 'dead economy". Trump has imposed the highest 50 per cent tariff on Indian goods with effect from August 27.
Also, the rating upgrade will help lower borrowing cost of Indian companies in international markets. PTI DRR HVA
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