And on Tuesday, four-session of losses came to an end, with the Indian rupee gaining 12 paise to end at 90.18 (provisional) to the U.S. dollar, as a weaker dollar index in foreign markets encouraged the rupee. Still, the recovery was not strong as domestic equities still were weak, and geopolitical issues continued to weigh on sentiment.
The rupee in the interbank foreign exchange market started slightly better at 90.22 against the greenback and traded in a tight range of 90.08 to 90.25 throughout the day before closing stronger than before its close in the same area. Currency traders ascribed the returns to a slight repulsion in the U.S. dollar following the major economic data that did not show as expected.
The dollar index used to gauge the performance of the currency of the U.S. against a basket of six leading world currencies fell by 0.06 per cent to 98.21. The fall was a result of the announcement of the U.S. ISM Manufacturing PMI, which was lower than the market expectations, and this created doubt over the rate at which the economy was growing in the largest economy in the world.
But the strength in the rupee was limited by continuous underperformance in the domestic equity markets and the geopolitical tension that continued between the U.S and Venezuela and kept investors on their feet. An increase in crude oil prices also kept the gains down, with Brent crude futures contracts up by 0.47% to $62.05 per barrel, which put a strain on the import bill of India.
The stock markets crashed down dramatically which only worsened the mood even more. The yardstick Sensex fell 376.28 points to close at 85, 063.34 and the Nifty dropped by 71.60 points to close at 26,178.70. The foreign institutional investors remained net sellers with 36.25 crore worth of equities being sold on Monday, as per the exchange data.
The HSBC India Services PMI Business Activity Index dropped to 58.0 in December compared to 59.8 in November with the least growth.
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