The rupee lost some of its initial gains and finished the Wednesday session at 16 paise below its previous level at 89.79 (provisional) against the U.S dollar under the influence of the same thing foreign exchange funds outflow and great demand of the greenback by the bullion importers.
The local currency started on a strong performance in the interbank foreign exchange market at 89.56 against the dollar. It further tightened as early trade proceeded to hit an intra-day high of 89.51 representing a 12-paise increase compared to the prior close. Nevertheless, the trend was not continuous because selling pressure came later on the trading day as the rupee dropped into the negative zone at the day.
The players in the market indicated that the currency was under heavy pressure due to continuous withdrawals of capital by the foreign investors and the demand of the dollars by the importers especially in the bullion segment.
The U.S. currency is weakened against a basket of six major currencies in the world, with the dollar index being slightly weaker, down 0.13 per cent at 97.81. Meanwhile, the Brent crude oil, which is a major element to the Indian currency, owing to the high dependence of imports in the country, increased by 0.22% to trade at 62.52 per barrel in futures market.
Benchmark indices in the domestic equity front were down at the end of the day. BSE Sensex fell by 116.14 to close at 85,408.70 and the NSE Nifty dropped by 35.05 to close at 26,142.10.
Foreign Institutional Investors (FIIs) were also left to be net sellers, selling equities of 1,794.80 crore on Tuesday, as per exchange data.
Trying to facilitate the liquidity situation, Reserve Bank of India (RBI) on Tuesday said that it would buy government securities to the tune of 2 lakh crore and have a 10 billion dollar/rupee buy/sell swap auction.
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