Rupee rises 3 paise to 89.95 against US dollar in early trade

The rupee appreciated 3 paise to 89.95 against the US dollar in early trade, supported by a weaker greenback and strong IIP data. However, foreign fund outflows, higher crude prices and weak equities limited further gains

Mumbai: The rupee rose 3 paise to 89.95 against US dollar in early trade on Tuesday buoyed by a weaker greenback and strong IIP numbers.

However, FII outflows, marginally higher crude oil prices, and a weaker opening in the domestic equity markets capped sharp gains in the local unit, forex traders said.

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At the interbank foreign exchange, the rupee opened at 89.98 against the US dollar before rising to 89.95, up 3 paise from its previous close.

The rupee depreciated 8 paise to close at 89.98 against the US dollar on Monday.

“The RBI (on Monday) protected the top end of the curve while FPIs who sold equities also were dollar buyers, keeping bids on for the full day and taking it almost to 90 levels,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Bhansali further cited strong Index of Industrial Production (IIP) data, which was released on Monday.

“The IIP came at a 25-month high of 6.7 per cent for November against expectation of 2.5 per cent and last month growth of 0.5 per cent. The growth during the year has been 3.30 per cent against 2.70 per cent in the last month,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally down by 0.03 per cent at 98.01.

Brent crude, the global oil benchmark, was trading 0.03 per cent higher at USD 61.96 per barrel in futures trade, amid thin year-end trading and ongoing concerns about global demand.

On the domestic equity market front, the 30-share sensitive index Sensex declined 209.32 points to 84,486.22 in early trade while the Nifty was down 63.25 points to 25,878.85.

Foreign institutional investors offloaded equities worth Rs 2,759.89 crore on Monday, according to exchange data.