INR gains as dollar weakens overseas; Upside limited by pullback in local equities

The Indian rupee appreciated 17 paise to settle at 85.40 (provisional) against the US dollar on Monday, on weak US dollar index and a decline in crude oil prices. The dollar index was down almost 1% near 100 mark amid rising concerns on US economic growth. Global investors were cautious as global rating agency Moody's downgraded US investment grade rating, leading to a fall in dollar index. Meanwhile, local shares fell modestly on Monday, with IT stocks leading losses after Moody's downgraded the U.S. credit rating by one notch to Aa1 from Aaa, citing rising levels of government debt and interest payments. The benchmark S&P/BSE Sensex dropped 271 points, or 0.33 percent, to 82,059.42, tracking weak cues from global markets and a decline in U.S. stock futures. The broader NSE Nifty index closed down 74 points, or 0.3 percent, at 24,945.45. At the interbank foreign exchange, the domestic unit opened at 85.43 and moved between the intra-day high of 85.35 and the low of 85.61 against the greenback. The unit ended the session at 85.40 (provisional), registering a gain of 17 paise over its previous closing level.

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