Rupee slips 3 paise to 88.12 vs dollar amid US tariff worries, foreign outflows

The rupee edged lower to 88.12 against the US dollar on Tuesday, weighed down by persistent foreign portfolio outflows and concerns over US-India trade tensions.

Mumbai: The rupee pared initial gains to settle 3 paise lower at 88.12 (provisional) against the US dollar on Tuesday, tracking persistent foreign portfolio outflows and global trade tensions.

Forex traders said the rupee remained under pressure on worries over US tariffs on India and global trade uncertainties. Moreover, sustained foreign fund outflows also dented investor sentiments.

At the interbank foreign exchange, the rupee opened at 87.98 against the US dollar and touched an intraday low level of 88.19 before ending the session at 88.12 (provisional), down 3 paise from its previous close.

On Friday, the rupee touched the lowest-ever intraday level of 88.38 but pared all losses before ending 3 paise higher at Rs 88.09 against the US dollar.

The unit had recorded its all-time low closing level of 88.15 against the dollar on September 2.

The forex market was closed on Monday, as the Maharashtra government had declared a public holiday on account of Eid-e-Milad on September 8, instead of September 5.

"We expect the rupee to trade with a negative bias as the trade tariff issue between India and the US may continue to pressure the rupee. Though there are signs of thawing, till there is no announcement, market sentiments may continue to remain dented," said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.

Choudhary further added that weakness in the US Dollar index amid rate cut expectations may support the rupee at lower levels.

"Investors may remain cautious ahead of CPI inflation this week. USD/INR spot price is expected to trade in a range of 87.80 to 88.45," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.17 per cent to 97.29.

Brent crude, the global oil benchmark, was trading 0.59 per cent higher at USD 66.41 per barrel in futures trade.

On the domestic equity market front, the Sensex rallied 314.02 points to settle at 81,101.32, while the Nifty climbed 95.45 points to 24,868.60.

Foreign Institutional Investors offloaded equities worth Rs 2,170.35 crore on Monday, according to exchange data.

Meanwhile, in a fresh outburst, White House trade advisor Peter Navarro on Monday said India "must come around" at some point on trade negotiations with the US or else it "won't end well" for Delhi.

Navarro, in an interview with the ‘Real America’s Voice’ show, said the Indian government takes offence to him and described India as the ‘Maharajah’ of tariffs.

Finance Minister Nirmala Sitharaman has said that the government is keeping a 'good watch' on exchange rates, stressing that besides the rupee, several other currencies have depreciated against the US dollar.

"The rupee slide is largely against the dollar, not against any other currencies. That's also because of the way globally, the dollar has strengthened," she said.