Mumbai, February 11 The rupee depreciated by 22 paise to close at 90.78 against the US dollar on Wednesday, amid increased dollar demand from importers and geopolitical tensions.
Forex traders said that the rupee is trading with a slight negative bias due to geopolitical tensions and high crude oil prices. Increased demand for dollars from importers may also put pressure on the rupee. However, inflows from foreign investors may support the local currency at lower levels.
At the interbank foreign exchange market, the rupee opened at 90.56 against the US dollar, and traded between a low of 90.75 and a high of 90.46 against the greenback during the day.
The rupee eventually settled at 90.78, registering a fall of 22 paise over its previous close.
On Tuesday, the rupee reversed its initial losses and closed on a positive note, up by 10 paise at 90.56 against the US dollar.
"The Indian rupee declined today due to dollar demand from importers and geopolitical tensions. A surge in crude oil prices also weighed on the rupee. However, a weak US dollar and foreign inflows cushioned the downside," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
Analysts said that while markets initially welcomed the India-US trade deal, new concerns have emerged after the White House released its fact sheet.
The fact sheet highlights key terms of the agreement, including that India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products.
This includes dried distillers' grains, red sorghum, tree nuts, and fresh and processed fruits, certain pulses, soybean oil, wine and spirits, and other products. India has committed to buying more American products and purchasing over USD 500 billion of US energy, information and communication technology, agricultural, coal, and other products.
Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading 0.26 per cent lower at 96.54.
Brent crude, the global oil benchmark, was trading 1.44 per cent higher at USD 69.78 per barrel in futures trade.
On the domestic equity market front, the Sensex dropped 40.28 points to settle at 84,233.64, while the Nifty was up 18.70 points to 25,953.85.
On Wednesday, foreign institutional investors purchased equities worth Rs 943.81 crore, according to exchange data.
