Rupee declines 9 paise to end at 82.60 against US dollar

Risk aversion sentiment among investors ahead of the US Federal Reserve's interest rate decision impacted trading

The rupee pared most of its early losses to close down by 9 paise at 82.60 against the US dollar on Tuesday, weighed down firm crude oil prices and inflation concerns.

Capital inflows into the equity markets and gains in local stocks helped the rupee trim losses in the closing session, analysts said.

Risk aversion sentiment among investors ahead of the US Federal Reserve's interest rate decision also impacted trading, forex dealers said.

At the interbank foreign exchange market, the rupee opened lower at 82.63 against the greenback and witnessed a high of 82.56 and a low of 82.90.

It finally settled at 82.60, down 9 paise over its previous close of 82.51.

"Rupee traded weak on pricing in the US CPI possible impact as the dollar takes support of 104$ but at the same time weak CPI shall help the FED's committee to be neutral if not dovish in the stance on hiking the possible 0.50 bps in coming days.

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"India's CPI data at 5.88% was at RBI's upper tolerance limit but IIP data contracting at 4 per cent in October kept rupee weak. Rupee range can be between 82.25-83.25 considering US CPI on 13th Dec and policy announcement in coming days," Jateen Trivedi, VP Research Analyst at LKP Securities said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.15 per cent to 104.98.

Brent crude futures, the global oil benchmark, climbed 1.73 per cent to $79.32 per barrel.

In the domestic equity market, the 30-share BSE Sensex closed 402.73 points or 0.65 per cent higher at 62,533.30. The broader NSE Nifty rose 110.85 points or 0.60 per cent to 18,608.

Foreign Institutional Investors (FIIs) turned net buyers in the capital markets on Monday as they bought shares worth Rs 619.92 crore, according to exchange data.

Meanwhile, retail inflation dipped below the RBI's upper tolerance level of 6 per cent for the first time in 11 months in November as softening prices of food items brought relief, but the central bank may wait for more data before pausing hikes in interest rates.

As per the data released by the National Statistical Office (NSO) on Monday, the consumer price index (CPI) based inflation declined for the second consecutive month to 5.88 per cent in November, from 6.77 per cent in October 2022. It was 4.91 per cent in November last year.

India's industrial production contracted by 4 per cent in October, the sharpest fall in 26 months, mainly due to a decline in output of manufacturing and subdued performance of mining and power generation sectors.