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Rupee halts 4-day rally on RBI policy eve, down 7 paise

The rupee had gained 30 paise over the last four sessions against the American currency

Press Trust of India  |  Mumbai 

Rupee halts 4-day rally on RBI policy eve, down 7 paise

Snapping its four-day winning run, the on Tuesday turned weaker by 7 paise to end at 64.43 against the US amid caution ahead of the outcome of the RBI's bi-monthly policy review meet on Wednesday.

Fresh purchases by state-run-banks on behalf of corporate clients and a retreat in local equities after record-setting run also weighed on the forex trade.

The had gained 30 paise over the last four sessions against the American currency.

Meanwhile, geopolitical tensions took on more significance following the shock move by four US Arab allies led by Saudi Arabia to isolate Qatar.

Expectations for an interest rate cut by the apex bank in its Wednesday's policy meet to rejuvenate the sagging economy against the backdrop of softening inflations somewhat cushioned the sentiment, a forex dealer said.

The domestic unit opened firm at 64.32 from overnight closing level of 64.36 at the Interbank Foreign Exchange (Forex) Market and advanced further to 64.31 due to initial selling.

But, soon it washed out initial gains and dropped to touch an intra-day low of 64.45 on the back of fag-end demand from importers before concluding at 64.43, showing a loss of 7 paise, or 0.11 per cent.

The RBI, meanwhile, fixed the reference rate for the at 64.3516 and for the euro at 72.5178.

(FPIs) bought shares worth a net Rs 476.64 crore on Monday, as per provisional data.

Domestic bourses succumbed to profit-taking after two-day record run amid caution in the absence of any meaningful fresh domestic triggers and also concerns of stretched valuation amid sluggish global cues.

On the global front, the greenback remained under immense pressure against its major rivals on the back looming geopolitical risk events.

Investors were also wary ahead of Britain's election and a European Central Bank meeting, both of which are also set for Thursday.

The index, which tracks the US currency against a basket of six major rivals, was down 0.13 per cent at 96.64.

In cross-currency trades, the dropped further against the British pound to end at 83.15 from 83.08 per pound and drifted against the euro to finish at 72.48 as compared to 72.35 earlier.

The local unit also fell sharply against the Japanese yen to close at 58.95 per 100 yens from 58.21.

Meanwhile, the domestic market benchmark Sensex fell by 118.93 points, or 0.38 per cent, to close at 31,190.56 on Tuesday.

In forward market on Tuesday, premium for eased on mild receivings from exporters.

The benchmark six-month premium payable in November 2017 edged down to 144-146 paise from its Wednesday level of 145- 147 paise and far forward May 2018 contract also softened to 294-296 paise from Monday's level of 295-297 paise.

In the international commodity front, crude prices wobbled again -- plunging further below the $50 a barrel on Tuesday on concerns that a diplomatic rift between Qatar and several Arab states including Saudi Arabia could undermine efforts by OPEC to tighten the market.

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