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Rupee drops 20 paise amid renewed growth concerns

The rupee depreciated by 20 paise to settle at 73.58 against the US dollar on Tuesday due to forex outflows and a stronger greenback in the global markets.

At the interbank forex market, the rupee opened on a weak note at 73.50 and fell further to a low of 73.64 as stock markets continued to fall for the fourth straight day.

Renewed growth concerns following resurgence of coronavirus cases in Europe and subsequent restrictions weighed on investor sentiment, dealers said.

The rupee closed at 73.58 against the greenback, registering a fall of 20 paise over its last close of 73.38 on Monday.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was up 0.06 per cent at 93.71.

On the domestic equity market front, the 30-share BSE benchmark Sensex settled down by 300.06 points or 0.79 per cent at 37,734.08. The broader NSE Nifty fell 96.90 points or 0.86 per cent to finish at 11,153.65.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 2,072.76 crore on Tuesday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.65 per cent to USD 41.71 per barrel.

“Rupee in the first half of the session was weighed down following strength in the dollar against its major crosses and weakness in the domestic equities. But in the latter half recovery was witnessed primarily on back of short covering,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Somaiya further said that “market participants remained cautious ahead of the important Fed Chairman testimony that is scheduled today before the House Financial Services Committee. In the next couple of sessions further strength in the dollar could weigh on the rupee. We expect USDINR (Spot) to quote in the range of 73.20 and 73.80.”

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee depreciated against the US currency weighed by risk off sentiments amid concerns that fresh lockdowns in Europe to control surging coronavirus infections could impede a quick economic recovery.

“The uncertainty surrounding the fiscal stimulus package and the elections in the US added to the wariness of the recovery of the economy and weighed on sentiments,” Iyer said.

The rupee depreciated by 0.3 per cent this Tuesday, its biggest single-session decline since September 8, Iyer added.

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