Owing to poor domestic stock markets and increased US Treasury yields, the rupee weakened by 21 paise to 85.63 (provisional) per US dollar on Tuesday. According to forex analysts, the reason for the rupee decline was the increase in the US 10-year yield. Because of this, both debts and emerging market currencies like the rupee are feeling the pressure.
The rupee at the interbank market commenced the day at 85.47 and soon experienced some fluctuation, trading between 85.39 (its high of the day) and 85.65 (its low), ending the day at 85.63. Its previous close value was two rupees higher than the one announced today. Although there were many pressures, the drop in the index was mitigated by the euro since the US dollar index went down by 0.19% and is worth 100.23 against six major world currencies.
Foreign investors continued to pull their investments out, while oil prices remained high, adding to the problems facing the rupee this year. Nonetheless, the cost of Brent crude went down by a small percentage in future trading.
At the same time, stocks within the country followed a path similar to that of the currency. Both the BSE Sensex and NSE Nifty 50 lost around 1% at the close of trading. During trading, the Sensex dipped over 800 points to 81,209.64, and the Nifty 50 was down by 260 points at 24,679.90. A drop of over 1% took place in the Nifty Midcap 100 and the Nifty Smallcap 100, which had been rising for six consecutive days.
The market fell further due to a bleak sentiment worldwide and profit-taking in different industries. The data from exchange trading shows that foreign funds sold shares worth Rs 525.95 crore on Monday, leading to a weaker attitude towards the stock market.
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