Rupee rebounds 8 paise to 86.62 against US dollar, recovering from historic low
New Delhi: The rupee rebounded from its historic low, gaining 8 paise to settle provisionally at 86.62 against the US dollar on Tuesday, as the American currency retreated from record highs, Reuters reported.
A recovery in domestic equity markets, spurred by macroeconomic data, also supported the Indian currency despite persistent pressure from elevated crude oil prices and sustained foreign fund outflows.
At the interbank foreign exchange market, the rupee opened at 86.57, peaked at an intra-day high of 86.45, and finally closed at 86.62, an 8-paise improvement over Monday’s record low of 86.70.
On Monday, the rupee had recorded its steepest single-day decline in nearly two years, plunging 66 paise.
The previous largest fall, of 68 paise, occurred on February 6, 2023.
The rupee has lost over Re 1 in the past two weeks, slipping from its December 30 close of 85.52.
It breached the 85-per-dollar threshold for the first time on December 19, 2024.
Last Friday, it depreciated by 18 paise to 86.04 after a marginal 5-paise gain on Thursday. Earlier in the week, it had fallen by 6 paise and 17 paise in back-to-back sessions.
Analysts attributed the rupee's recovery to cooling retail inflation and a softer dollar index, which fell 0.39% to 109.38.
However, they cautioned that high crude oil prices, which remain elevated at USD 81.09 per barrel, could keep the currency under pressure.
On the domestic front, the 30-share BSE Sensex rose 169.62 points (0.22%) to close at 76,499.63, while the Nifty climbed 90.10 points (0.39%) to settle at 23,176.05.
However, foreign institutional investors (FIIs) continued to offload equities, selling Rs 4,892.84 crore on Monday.
Government data released on Tuesday revealed that wholesale price inflation (WPI) increased to 2.37% in December, driven by a surge in manufactured product prices, even as food prices eased.
Retail inflation, based on the Consumer Price Index (CPI), fell to a four-month low of 5.22% in December, providing potential leeway for the Reserve Bank of India (RBI) to consider reducing the key interest rate in upcoming policy reviews.
The CPI inflation eased for the second consecutive month after exceeding the RBI's 6% upper tolerance level in October, reflecting some relief in the food basket.
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