Rupee settles 4 paise lower at 89.20 against US dollar

Mumbai: The rupee pared initial gains and settled 4 paise lower at 89.20 (provisional) against the greenback on Tuesday, weighed down by negative cues from domestic equity markets.

Falling crude oil prices supported the Indian currency at lower level, however, withdrawal of foreign funds kept the rupee under pressure, forex analysts said.

At the interbank foreign exchange market, the rupee opened at 89.02 and touched an intra-day low of 89.27 against the greenback. The unit ended the session at 89.20 (provisional) against the US dollar, registering a loss of 4 paise from its previous closing level.

The rupee had settled sharply higher by 50 paise at 89.16 against the greenback on Monday, a day after crashing 98 paise to touch its lifetime low of 89.66 against the US dollar on Friday.

Anuj Choudhary, Research Analyst, Commodities Research Mirae Asset Sharekhan, said positive domestic markets and softening of crude oil prices supported the rupee. However, a strong US dollar and FII outflows capped sharp gains.

"We expect the rupee to trade with a slight negative bias on importer demand for dollars and foreign outflows. However, weak tone in crude oil prices and positive global markets may support the rupee at lower levels. There are renewed talks of rate cut by the Fed which may lead to volatility. USD-INR spot price is expected to trade in a range of Rs 89 to Rs 89.50," Choudhary said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was lower by 0.06 per cent at 100.01.

Brent crude, the global oil benchmark, declined 0.49 per cent to USD 63.06 per barrel in futures trade.

On the domestic equity market front, the Sensex declined 313.70 points, or 0.37 per cent, to settle at 84,587.01, while Nifty fell 25,884.80 points, or 0.29 per cent, to 25,884.80.

Foreign institutional investors sold equities worth Rs 4,171.75 crore on a net basis on Monday, according to exchange data.