Mumbai, March 25
The rupee declined by 18 paise to 93.94 against the US dollar in early trade on Wednesday, as continued foreign fund outflows kept investors cautious.
However, a fall in global crude oil prices, a weaker US dollar, and a strong opening in domestic equity markets helped limit further losses in the local currency, according to forex traders.
They added that foreign fund outflows, driven by uncertainties surrounding the West Asia crisis, also put pressure on the rupee.
At the interbank foreign exchange market, the rupee opened at 93.94 against the US dollar, registering an 18 paise drop from its previous close, and remained at that level.
On Tuesday, the rupee had fallen 23 paise to settle at 93.76 against the US dollar.
“The trend of dollar buying is likely to persist unless the RBI intervenes by selling the greenback, as there is limited dollar supply from other sources. Exporters may hedge up to one month at the current level of 93.90, while importers can take advantage of dips to buy,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
He added that market participants are expecting the rupee to strengthen towards 92.80, with hopes of RBI intervention before the end of the current financial year.
The dollar index, which measures the US dollar’s strength against a basket of six currencies, was trading 0.15 per cent lower at 99.28.
Brent crude, the global oil benchmark, was down 4.4 per cent at USD 99.89 per barrel in futures trading.
In the domestic equity market, the Sensex surged 1,161.61 points, or 1.57 per cent, to 75,230.06, while the Nifty advanced 372.85 points, or 1.63 per cent, to 23,285.25.
According to exchange data, foreign institutional investors offloaded equities worth Rs 8,009.56 crore on a net basis on Tuesday.
