Rupee reverses early gains on likely FPI outflows; ends lower at 86.37/$

Indian Rupee today: The domestic currency closed 7 paise lower at 86.37 against the dollar on Tuesday, according to Bloomberg

Indian Rupee gave up early gains to extend losses to Tuesday on likely foreign outflows as the dollar index and oil prices remained lower. 

 

The domestic currency closed 7 paise lower at 86.37 against the dollar on Tuesday, according to Bloomberg. The rupee has witnessed nearly 0.88 per cent depreciation in the current calendar year. 

 

Rupee traded lower as domestic capital markets remained weak and the dollar index held flat to slightly positive near 97.86, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. "Market participants now shift focus to Fed Chair Powell’s upcoming speech, which could influence global currency sentiment. Rupee is expected to remain within a range of 85.75–86.60."

   

The currency fell for the fifth straight session on Tuesday due to sustained dollar demand from importers. Selling in equity markets also weighed on the currency in the previous session. On Monday, FPIS sold equity worth ₹1,681.23 crore and has offloaded stocks worth ₹4,742 crore so far this month.  

 

"Foreign portfolio investor (FPI) demand for dollars remains strong, while the Reserve Bank of India (RBI) is intervening at higher levels to support the rupee," Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, noted.

 

Investors' focus will be on US Fed Chair Jerome Powell’s speech today, along with money supply data. 

 

On the tariff front, the next round of formal negotiations between India and the US has been pushed beyond the August 1 deadline amid continued uncertainty over an interim trade deal. Uncertainty over the eventual state of tariffs globally has been a huge overhang for the forex market, analysts said.  

 

After falling for five straight months, the dollar index has recovered 1.5 per cent in July on strong economic data and less probability of an immediate rate cut. The measure of the greenback against a basket of six major currencies was down 0.04 per cent at 97.81.

 

In commodities, oil prices fell as traders priced in little impact of European sanctions against Russia, while signs of a brewing US-EU trade conflict also weighed. Brent crude price was down 0.98 per cent at 68.53 per barrel, while WTI crude prices were lower by 1.04 per cent at 66.50, as of 3:40 PM IST.