The rupee depreciated 17 paise to 90.11 against the US dollar in early trade on Thursday as prevailing risk-averse market sentiment, compounded by a high US dollar demand from importers, dented investor sentiments.
Forex traders said the rupee is likely to trade with a negative bias on muted domestic markets and sustained foreign fund outflows.
Moreover, investors are also awaiting cues from the US-India trade talks, which could boost the rupee in the coming days.
At the interbank foreign exchange, the rupee opened at 89.95 against the US dollar, then lost ground and fell to 90.11 against the American currency, registering a fall of 17 paise from its previous close.
On Wednesday, the rupee settled at 89.87 against the US dollar.
“The US-trade team has said that they have got the best proposal from India which could show up as positive for the rupee, though overall we may see it crumble under the short positions once the trade deal is finalised,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
US Trade Representative (USTR) Jamieson Greer has said the US has received “best” ever offers from India on the proposed trade agreement amid commencement of two-day talks here between the two countries.
Speaking at a Senate Appropriations Subcommittee hearing on Tuesday in Washington, Greer said that there is resistance in India to certain row crops and other meat and products. Row crops in the US include corn, soybeans, wheat and cotton.
These remarks are important as both sides are trying to conclude the first phase of the proposed Bilateral Trade Agreement (BTA).
The range for USD/INR for the day is 89.70 to 90.20, with FPIs still sellers in the Indian market, Bhansali added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.15 per cent lower at 98.63, after the FED cut rates and gave a not-so-hawkish guidance.
Brent crude, the global oil benchmark, was trading 0.22 per cent higher at USD 62.35 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex was trading 80.15 points higher at 84,471.42, while the Nifty was up 34.40 points at 25,792.40.
Foreign Institutional Investors sold equities worth Rs 1,651.06 crore on Wednesday, according to exchange data.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
