Shedding its four-day gains, the rupee today closed 7 paise lower at 64.43 against the US dollar amid caution ahead of the RBI’s bi-monthly policy announcement tomorrow. The rupee had gained 30 paise over the last four sessions against the greenback.
Expectations for an interest rate cut by the apex bank in its Wednesday’s policy meet to rejuvenate the sagging economy against the backdrop of softening inflation somewhat cushioned the rupee sentiment, a forex dealer said. Fresh dollar purchases by state-run-banks on behalf of corporate clients and a retreat in local equities after record-setting run also weighed on the forex trade.
The domestic currency opened at 64.32 from overnight closing level of 64.36 and advanced further to 64.31 due to initial dollar selling. But, on the back of dollar demand from importers, it pared initial gains and dropped to an intra-day low of 64.45 before closing at 64.43, down 7 paise or 0.11 per cent.
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Indian benchmark exchanges were pulled lower due to profit-taking after a two-day record run. BSE Sensex fell 118.93 points or 0.38 per cent to close at 31,190.56 points while NSE Nifty fell 37.95 points or 0.39% to close at 9,637.15 points.
On the global front, the US Dollar remained under pressure against its major rivals on the back of looming geopolitical risk events. The dollar index, which tracks the greenback against a basket of six major rivals, was down 0.13 per cent at 96.64.
Geopolitical tensions took on more significance following the shock move by four US Arab allies led by Saudi Arabia to isolate Qatar. Crude prices fell below the USD 50 a barrel on Tuesday on concerns that a diplomatic rift between Qatar and several Arab states including Saudi Arabia could undermine efforts by OPEC to tighten the market. Investors were also wary ahead of Britain’s election and a European Central Bank meeting, both of which are also set for Thursday.