Rupee opens 35 paise lower at 72.20 against US dollar

Sliding further, the rupee on Wednesday opened 35 paise lower at 72.20 against the US dollar amid rise in oil prices and strengthening of the greenback. The domestic unit on Tuesday staged a late rebound after plunging 114 paise in early trade Tuesday but still ended 53 paise lower at 71.85 against the US dollar following RBI Governor Urjit Patel's shock exit coupled with the loss of the ruling BJP in key state elections.

Analysts said the RBI governor's surprise resignation and the ruling BJP's loss in state elections unnerved forex traders initially but a fag-end rebound in domestic equities and dollar selling by some state-owned banks helped in the recovery of the domestic currency, PTI reported. 

"Timing of the (RBI) governor's resignation and the already-cautious mood in the markets following yesterday's exit polls, to be followed by today's actual count for the state elections, will dampen sentiments. Rupee is likely to weaken past 72/USD as NDFs suggest, with Monday's equity sell-off to seek further downside," Radhika Rao, Economist at DBS Bank and Philip Wee, FX Strategist at DBS Bank, said.

In the equity market, the frontline indices staged a dramatic recovery on Tuesday after a dismal start post the initial outcome of states election verdict. The Nifty recovered 233 points from an opening low of 10,334 to finally end at 10,549, up 61 points or 0.6 per cent. 

Broader markets outshone the benchmarks in an eventful session as the midcap and small cap indices clocked gains of 1.7 per cent each. The market breadth turned positive with advance-decline ratio of 2.8:1. 

On the global front, Asian stock markets edged ahead on Wednesday as US President Donald trump sounded upbeat about a trade deal with China, while sterling struggled with talk of an imminent party coup against British Prime Minister Theresa May, Reuters reported.