Mumbai: The rupee declined 16 paise against the US dollar to close at 85.92 on Wednesday, as a strengthening American currency amid uncertainties over the India-US trade pact hit investor sentiment.
However, sliding global crude prices supported the domestic unit, according to forex traders.
At the interbank foreign exchange, the rupee opened weak at 86.02 against the dollar. It traded in the range of 85.74-86.05 during the day before closing at 85.92, down 16 paise from its previous close.
In the previous session, the rupee appreciated 16 paise to close at 85.76 against the US dollar.
“The Indian rupee experienced notable volatility today, initially weakening against a robust US dollar before recovering mid-session due to dollar supply, only to conclude with net losses.
“This movement follows a three-day consolidation phase for the USDINR pair, ranging from 85.70 to 86.05. The sentiment remains acutely favourable for the dollar, driven by expectations of a hawkish Federal Reserve post-US inflation data and persistent uncertainties regarding India-US trade agreements,” Dilip Parmar, Research Analyst at HDFC Securities, said.
An Indian commerce ministry team is in Washington for another round of talks on the proposed bilateral trade agreement. The four-day talks, which started on Monday, will conclude on Thursday.
“We continue to await the outcome of the trade deal as inflows and outflows keep the rupee well entrenched in a range of 85.70 to 86.10. We expect a similar range for the rupee tomorrow (Thursday) as well,” Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said.
Brent crude, the global oil benchmark, was down 0.26 per cent to USD 68.53 per barrel in futures trade.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped 0.07 per cent to 98.54.
On the domestic equity market front, the Sensex rose 63.57 points to settle at 82,634.48, while the Nifty inched up 16.25 points to 25,212.05.
Foreign institutional investors (FIIs) sold equities worth Rs 1,858.15 crore on a net basis on Wednesday, according to exchange data.
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