Rupee opens 13 paise lower at 71.90 against US dollar amid weak global cues

The rupee on Thursday opened 13 paise lower at 71.90 against the US dollar amid weak global cues. 

The domestic unit on Wednesday lost 29 paise to close at 71.77 as fears of an impending global recession prompted investors to stick to safe-haven assets like the Japanese yen.

Rising crude oil prices and weakness in the equity market put further pressure on the domestic currency, forex dealers said.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 923.94 crore on Wednesday, as per provisional data.

On the domestic front, the Union Cabinet on Wednesday relaxed the rules for single-brand retail, more than seven years after the foreign investment cap was removed for the segment to attract marquee foreign brands such as Gucci, Louis Vuitton, Ikea and others into the country. The latest government move is in line with the recent Budget announcements on FDI changes. READ MORE

The move, according to analysts, could keep losses capped for the rupee. Market participants are also expected to keep an eye on Q1 GDP number, which is slated to release on Friday.  According to a Reuters poll, Indian economy is set for weakest quarter of growth in five years. The poll median showed the economy was expected to have grown at a year-on-year pace of 5.7 per cent in the June quarter, a touch slower than 5.8 per cent in the preceding three months. 

"Today, USD/INR pair is expected to quote in the range of 71.60 and 72.30," said Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL). 

On the global front, bond yields flirted with record low levels while stocks struggled to recover on Thursday as economic turbulence from intensifying US-China frictions and the spectre of a no-deal Brexit drove investors to safer harbours. MSCI's broadest index of Asia-Pacific shares outside Japan was flat in early trade while Japan's Nikkei rose 0.14 per cent, said a Reuters report. 

In the currency market, major currencies saw limited moves, with the yen flat at 106.08 per dollar and the euro fetching $1.1084. British pound was trading at $1.2217. It slumped 0.61 per cent the previous day as the UK political crisis deepened after Prime Minister Boris Johnson decided to suspend Britain's parliament for more than a month before Brexit.

In commodities, oil prices fell for the first time in three days after San Francisco Federal Reserve President Mary Daly sounded a note of concern about the strength of US economy, the Reuters report added.