Rupee falls 2 paise to close at 77.57 versus the US dollar

Dollar falls as investors cut bets on rising US rates, loosening lockdowns in China

While the dollar index has fallen further to the downside and eying the psychological level of 100, the local unit is weakening along with other emerging market currencies on growth and inflation worries. "So far this month, the rupee has been the worst-performing currency among Asian currencies with a loss of 1.6 percent after the RBI joined the global central banks in raising interest rates to curb inflation," Parmar said.

In the current calendar year, foreign institutional investors sold equities worth USD 21.25 billion and USD 1.82 billion of debt. The near-term outlook for USDINR remains bullish as long as it trades above 76.70, while on the higher side it faces strong resistance in the area of 77.80 to 78, Parmar noted.

According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee continued to consolidate in a narrow range despite volatility in domestic and global equities. In the last couple of sessions, the US dollar retraced from higher levels. Major crosses euro and pound extended gains after hawkish comments from the European Central Bank (ECB) President.

Also read: Euro, Pound rises in Asia after improvement in investor sentiment

"Focus will be on the preliminary manufacturing and services PMI number from the US, Eurozone and the UK. We expect the USDINR to trade sideways and quote in the range of 77.20 and 77.80," Somaiya said. "We suspect RBI intervention may have kept losses in check for the rupee. Over the near term, USDINR can trade within a range of 77.30 and 77.80 levels on spot," Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, declined by 0.3 percent to a month’s low of 101.79. Global oil benchmark Brent crude futures fell 0.37 percent to USD 113 per barrel. The 30-share BSE Sensex ended 236 points or 0.43 percent lower at 54,052.61, while the broader NSE Nifty fell 89.55 points or 0.55 percent to 16,125.15.

Foreign institutional investors were net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 2,393.45 crore, as per stock exchange data.

Also read: View: After hitting record lows, rupee may depreciate further