The rupee pared initial gains and settled for the day in the negative territory, down 3 paise at 89.70 (provisional) against the US dollar on Monday, as the support from positive domestic equities was negated by a recovery in crude oil prices.
Forex traders said the lack of progress in the US-India trade negotiations weighed on the sentiment, while a weak tone in the US dollar index supported the domestic unit at lower levels.
At the interbank foreign exchange, the rupee opened at 89.53 against the US dollar, then touched an intra-day high of 89.45, registering a 22-paise gain from its previous close.
At the end of the trading session on Monday, the rupee was quoted at 89.70 (provisional), down 3 paise from its previous close.
On Friday, the rupee appreciated by 53 paise to 89.67 against the US dollar.
“We expect the rupee to trade with a positive bias on a weak US dollar and strength in the domestic markets. We may not see a lot of fresh FII outflows ahead of new year holidays. However, delay in trade deal between India and US may continue to weigh on the rupee at higher levels,” said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
Choudhary further noted that investors may watch out for US GDP data. USD-INR spot price is expected to trade in a range of 89.20 to 89.80.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.08 per cent lower at 98.52.
Brent crude, the global oil benchmark, was trading 0.86 per cent higher at $61 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 638.12 points to settle at 85,567.48, while the Nifty climbed 206 points to 26,172.40.
Foreign Institutional Investors purchased equities worth ₹1,830.89 crore on Friday, according to exchange data.
India’s forex reserves jumped by $1.689 billion to $688.949 billion during the week ended December 12, the Reserve Bank of India said on Friday. In the previous reporting week, the overall reserves increased by $1.033 billion to $687.26 billion.
Meanwhile, India and New Zealand on Monday announced the conclusion of negotiations for a free trade agreement, under which a host of domestic goods from sectors such as textiles, footwear, engineering, and marine products will get duty-free access in New Zealand.
