Rupee depreciates 12 paise to close at 88.62 against US dollar

Mumbai, Nov 12 (PTI) The rupee depreciated 12 paise to close at 88.62 against the US dollar on Wednesday, weighed down by the strength of the American currency in the overseas market and elevated crude oil prices.

Forex traders said the rupee traded within a range as renewed optimism over the India-US trade deal and rising hopes that the government shutdown could end soon supported the domestic unit at lower levels.

At the interbank foreign exchange, the rupee opened at 88.61 against the US dollar and touched an intra-day high of 88.56 and a low of 88.66 during the day.

The domestic unit finally settled for the day at 88.62, registering a loss of 12 paise from its previous close.

On Tuesday, the rupee had settled at 88.50 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.15 per cent higher at 99.58, on optimism that the US government shutdown will end soon.

The Senate has approved a bill to end the shutdown, and the House of Representatives could vote on it as early as Wednesday.

Dilip Parmar, Senior Research Analyst, HDFC Securities, said, "The rupee has depreciated following its recent surge, primarily weighed down by the resilient dollar index and a noticeable lack of dollar inflows.

"We continue to see an imbalance between dollar demand and supply, which is pressuring the currency. However, the market is looking toward a potential US-India trade deal as the crucial catalyst needed to provide the rupee with much-needed support." Near-term, we expect the USDINR pair to consolidate, trading between 88.40 and 88.80, he added.

Brent crude, the global oil benchmark, was trading 0.36 per cent higher at USD 64.28 per barrel in futures trade.

Moreover, the optimism over a nearing US trade deal supported the local unit, they said.

The US is "pretty close" to reaching a "fair trade deal" with India, President Donald Trump has said, adding that he will lower the tariffs imposed on Indian goods at "some point".

This is the second time in less than two weeks that the US president held out hope to seal the proposed bilateral trade deal with India.

On the domestic equity market front, the Sensex jumped 595.19 points to settle at 84,466.51, while the Nifty climbed 180.85 points to 25,875.80.

Foreign Institutional Investors sold equities worth Rs 1,750.03 crore on Tuesday, according to exchange data. PTI DRR TRB TRB