On Tuesday, the Indian rupee alternated in a narrow range and ended 6 paise in the negative at 90.95 (provisional) against the U.S. dollar pressured by the stronger greenback and increases in global crude oil prices.
The rupee in the interbank foreign exchange market started trading at 90.91 and went through a range of 90.91 to 90.97. The dealers credited the narrow movement to the potential impact of the Reserve Bank of India (RBI) which is suspected to have intervened to reduce excessive volatility. According to the market players, the central bank might have sold dollars to avoid the rupee to cross the important psychological mark of 91 against the U.S. currency.
The rupee had gained by the 5 paise on Monday to be quoted at 90.89 but the fall on Tuesday indicated a new wave of external pressures. In the short-term, analysts forecast that the rupee will move between 90.75 to 91.20 against the dollar basing on the world market and dollar fluctuations.
The greenback was being supported by the dollar index, which gauges the power of the U.S. currency against a combination of six major currencies and was trading 0.16% or 97.86 higher.
In the meantime, Brent crude futures increased by 0.27 per cent to 71.68 per barrel. An increase in oil prices is likely to drag down the rupee, since India has become a heavy importer of crude oil.
There were also steep falls in domestic equity markets. BSE Sensex fell by 1068.74 to end with 82225.92, and the NSE Nifty went down by 288.35 to close at 25424.65. Institutional investors, however, had bought equities in the last session to the value of 3,483.70 crore of foreign institutional investors.
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