The rupee initially gained ground but ended the day lower by 14 paise at 86.59 (provisional) against the US dollar on Tuesday. The drop was attributed to heavy selling in the domestic equity market and a rebound in the US dollar index.
Forex traders noted that the dollar initially weakened from its 109 levels but later climbed back to 108.66 after US President Donald Trump declared tariffs against Canada and Mexico, without imposing any tariffs on China.
The rupee is expected to see high volatility in the near future due to key events in the global and domestic economic landscape.
Opening at 86.28 against the greenback, the rupee touched an intraday high of 86.28 and a low of 86.59 before closing at 86.59. This marked a fall of 14 paise from its previous close of 86.45 against the US dollar.
Commenting on the market movements, Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, highlighted that the rupee opened higher following a weak US dollar and a decline in crude oil prices. However, the currency lost ground as domestic markets slumped and the US dollar index recovered.
Choudhary anticipated continued weakness in the rupee due to the strong US dollar and sluggish domestic markets. Nevertheless, a further drop in crude oil prices could provide some support to the rupee.
The dollar index, which measures the greenback against a basket of currencies, was down 0.62% at 108.66. Meanwhile, Brent crude fell 0.97% to $79.37 per barrel in futures trade.
On the stock market front, both the Sensex and Nifty experienced a volatile trading session. The Sensex dropped by 1,235.08 points, or 1.60%, to close at 75,838.36 points, while the Nifty fell by 320.10 points, or 1.37%, to end at 23,024.65 points.
Foreign Institutional Investors (FIIs) remained net sellers on Monday, offloading shares worth Rs 4,336.54 crore, according to exchange data.
