The rupee on Wednesday opened 21 paise higher at 72.18 against the US dollar. However, minutes later the currency slipped to 72.26 level.
The domestic unit on Tuesday tumbled 99 paise to settle at 72.39. That marked its worst single-day fall since August 5 and the lowest closing level since November 13, 2018. The depreciation in rupee's value came on the back of heavy sell-off in the domestic equity market and a weak macro environment.
In the capital market, foreign investors (FPIs) continued their selling spree as they offloaded Rs 2,016.2 crore on Tuesday while domestic institutional investors (DIIs) bought equities worth Rs 1,251.35 crore, NSE data showed.
“Indian rupee depreciated by nearly 1 rupee on Tuesday to slid past the 72 dollar mark. US-China trade war jitters and weak quarterly GDP data from India lead to this fall.
India’s Q1FY20 GDP came in at 5 per cent falling to a six-year low. Actual GDP data was lower than market estimates hence created a wave of pessimism for Indian rupee," said Vaqarjaved Khan, research analyst at Angel Broking.
Rupee is likely to depreciate towards 73.5 by the end of September’19 if the trade war escalates further between US and China and outflows from Indian equity market continues, Khan added.
On the global front, Asian stocks bounced on Wednesday, led by Chinese markets after a report showed growth in the country’s service sector accelerating despite broader economic headwinds, while the pound halted its decline on hopes a no-deal Brexit may yet be averted. MSCI’s index of Asia-Pacific shares outside Japan snapped two days of losses and gained 0.5 per cent, Reuters reported.
In the currency market, sterling was last up 0.1 per cent at $1.2097 after falling on Tuesday to $1.1959, the lowest level since October 2016. The dollar index against a basket of six major currencies stood at 98.938 after rising overnight to 99.37, its highest level since May 2017. In commodities, US crude oil futures rose 0.5 per cent to $54.22 per barrel, trimming some of the previous day’s large losses, the Reuters report added.