Rupee settles 2 paise lower at 88.61 against US dollar

Mumbai: In a range-bound trade, the rupee settled 2 paise lower at 88.61 (provisional) against the US dollar on Tuesday in line with negative sentiment in equity markets.

The emergence of foreign fund inflows, a weak greenback and lower crude oil prices helped the Indian currency resist downward pressure, traders said.

At the interbank foreign exchange market, the rupee opened at 88.67 and moved in a tight range of 88.69 and 88.58 against the dollar. The unit finally settled at 88.61 (provisional), down 2 paise from its previous closing level.

Investors were concerned about increasing import bills and the widening trade deficit of the country.

Traders were closely watching the progress on the proposed India-US trade deal as well as the domestic PMI data to be released later this week.

On Monday, the rupee settled 7 paise higher at 88.59 against the US dollar.

The rupee gained support from weak crude oil prices and optimism over trade tariffs to restrict its slide against the US currency, according to traders.

"Markets may remain volatile as the US government reopening would lead to economic data inflows. The US non-farm payrolls report is expected to be released on Thursday," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent lower at 99.42.

Brent crude, the global oil benchmark, declined 0.37 per cent to $63.96 per barrel in futures trade.

On the domestic equity market front, Sensex fell 277.93 points or 0.33 per cent to settle at 84,673.02, while Nifty tumbled 103.40 points or 0.40 per cent to 25,910.05.

Foreign institutional investors bought equities worth Rs 442.17 crore on Monday, according to exchange data.

The latest government data released on Monday showed India's exports contracted 11.8 per cent to $34.38 billion in October on account of the impact of high tariffs by the US, while the trade deficit widened to a record high of $41.68 billion, mainly due to a jump in gold imports.

The country's imports jumped 16.63 per cent to $76.06 billion due to high inbound shipments of the yellow metal, silver, cotton raw/waste, fertiliser, and sulphur.

In September, the trade gap widened to $31.15 billion, the highest in over a year.

While gold imports rose about 200 per cent to $14.72 billion, silver rose 528.71 per cent to $2.71 billion during October.

Crude oil imports dipped to $14.8 billion in October from $18.9 billion in the same month last year.