The Indian rupee performed almost the same way on Wednesday and fell only by 1 paisa to close at 89.23 (provisional) against the US dollar in a very range bound trade. The flow of money was subdued when good news on the domestic equities and a fall in oil prices around the world compensated the pressure of a stronger US dollar.
Forex traders believe that the market mood became risk averse as there has been sustained outflows of foreign funds and increasing geopolitical tensions that drove investors into less risky global securities. This risk appetite saw no major recovery in the rupee despite some local support in this case.
In the interbank foreign exchange market, the rupee opened at 89.24 and traded within a small range of 89.17 to 89.28 all through the day. The currency was gradually fixed at 89.23, a slight fall on Tuesday, when it had fallen 6 paise against the greenback.
The US dollar was strengthened all over the globe, and dollar index increased 0.12% to 99.70, which lowered the attractions of emerging market currencies. Meanwhile, Brent crude futures fell 0.13 per cent to USD 62.40 per barrel, which served to keep the strain on the import bill in India at bay.
Indian equities shot up on the domestic scene. Sensex soared by 1,022.50 or 1.21 per cent to close at 85,609.51. The Nifty followed the same trend and was up by 320.50 points, or 1.24 percent, to end at 26,205.30. Good performance in the market offered the rupee some underpinnings despite the external head winds still being there.
Stock exchange data indicated that on Tuesday, foreign institutional investors (FIIs) were net buyers and bought shares to the tune of 785.32 crore. Their general selling trend of recent weeks is however still affecting the currency sentiment.
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