Mumbai: The rupee depreciated 28 paise to close at 87.46 (provisional) against the US dollar Friday, as the strength of the American currency and a negative trend in domestic equities dented investor sentiments.
Forex traders said the ongoing uncertainty surrounding tariff imposition by the US has left financial markets in flux. Moreover, the tariff chaos has injected volatility and uncertainty into the US Dollar Index.
At the interbank foreign exchange, the rupee opened at 87.32 against the greenback. During the session it fell to an intra-day low of 87.53 before ending the session at 87.46 (provisional) against the dollar, logging a loss of 28 paise from its previous close.
On Thursday, the rupee settled almost flat with a marginal gain of 1 paisa at 87.18 against US dollar.
Elevated greenback against major crosses and sustained FII outflows also contributed to the decline in the domestic unit, forex traders said.
Besides, month-end dollar demand by importers amid uncertainty over US trade tariffs also boosted the American currency.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.08 per cent higher at 107.33.
Brent crude, the global oil benchmark, fell 0.74 per cent to USD 73.49 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex declined 1,414.33 points, or 1.90 per cent, to settle at 73,198.10, while the Nifty fell 420.35 points, or 1.86 per cent, to 22,124.70 points.
Meanwhile, the Reserve Bank on Friday conducted US dollar-rupee swap worth USD 10 billion for injecting long term liquidity in the system, with the auction eliciting robust demand. The settlement of auction will take place on March 4 and March 6.
Under the swap exercise, a bank shall sell US dollars to the Reserve Bank and simultaneously agree to buy the same amount of US dollars at the end of the swap period.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 556.56 crore in the capital markets on net basis on Thursday, according to exchange data.
On the global front, President Donald Trump plans to impose tariffs on Canada and Mexico starting Tuesday, in addition to doubling the 10 per cent universal tariff charged on imports from China.
The prospect of escalating tariffs has already thrown the global economy into turmoil – with consumers expressing fears about inflation worsening.
PTI
