Rupee recovers marginally, opens 7 paise higher against US dollar

The rupee on Tuesday opened 7 paise higher at 70.44 against the US dollar on Tuesday amid weak global cues and rise in crude oil prices. The domestic unit on Monday fell sharply by 59 paise to close at nearly two-and-a-half-month-low of 70.51 due to persistent foreign fund outflows and renewed worries over rising crude oil prices.

Domestic investors kept weighing weak cues from global markets amid uncertainties around US-China trade tariff deal. Also, sustained foreign fund outflows kept investors edgy.

Foreign investors remained net sellers in the capital markets, offloading shares worth Rs 1,056.01 crore Monday, provisional exchange data showed.

"Sovereign bonds edged higher due to contraction in factory output and expectations of inflation staying below the target. This could force RBI to look for the Interest rate cut options in upcoming policy meet. Rise of more than 1.5 per cent in crude prices and heavy selling in domestic equity markets also weighed on rupee during today's trade," said VK Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

On Tuesday, Asian stocks extended losses as the trade war between China and the United States escalated. China on Monday announced it would impose higher tariffs on $60 billion of US goods following Washington’s decision last week to hike its own levies on $200 billion in Chinese imports, said a Reuters report. 

In the overnight trade, the Dow Jones Industrial Average fell 2.38 per cent to 25,324.99, the S&P 500 lost 2.41 per cent to 2,811.87 and the Nasdaq Composite dropped 3.41 per cent to 7,647.02.

In the commodity market, oil prices gained in the early trade. Brent crude futures were at $70.30 a barrel at 0318 GMT, up 7 cents, or 0.1 per cent, from their last close, Reuters reported.