Rupee trades flat at 87.22 against dollar amid volatile market sentiment

Forex analysts note that the local currency faced additional pressure from a strengthening U.S. dollar index and a rebound in crude oil prices, compounding the impact of selling in domestic equities and the ongoing outflow of foreign capital.

Mumbai: The rupee turned almost flat and traded with a marginal loss of 1 paisa at 87.22 against the US dollar in early trade on Wednesday amid volatile sentiment due to uncertainties over trade tariff.

According to forex analysts, a strengthening American currency index and a recovery in crude oil prices also added pressure on the local unit, which was already weighed down due to selling in domestic equity and the continuous outflow of foreign capital.

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They said, market participants were also trading cautiously awaiting cues from macroeconomic data to be released in India and the US later in the day.

At the interbank foreign exchange, the rupee opened at 87.24, tumbled to 87.32 and then gained to 87.22 against the greenback in early deals, trading 1 paisa lower from its previous closing level.

The rupee ended 10 paise higher at 87.21 against the dollar on Tuesday, a day after losing 36 paise.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.07 per cent at 103.55.

Brent crude, the global oil benchmark, traded 0.66 per cent higher at US 70.02 per barrel in futures trade.

Domestic equity market traded on a flat note with the 30-share BSE Sensex falling marginally by 0.28 points to 74,102.04 points and the broader Nifty sliding 10.70 points, or 0.05 per cent, to 22,487.20 points.

Foreign institutional investors (FIIs) offloaded equities worth Rs 2,823.76 crore on a net basis on Tuesday, according to exchange data.

According to experts, the uncertainties over tariff moves intensified after President Donald Trump said the US would double the forthcoming levy on steel and aluminium to 50 per cent if they come from Canada but later hinted that he might reconsider the additional hike.