The rupee settled on a flat note, higher by 2 paise at 95.68 (provisional) against the US dollar on Wednesday, as renewed tensions between the US and Iran and delays in negotiations kept investors cautious.
Forex traders said a strong American currency and weak domestic markets also pressured the rupee. Attention has shifted toward the upcoming RBI Monetary Policy Committee meeting scheduled between June 3 and 5, they said.
At the interbank foreign exchange market, the rupee opened at 95.60 against the US dollar, and touched an intra-day low of 95.79 against the American currency.
At the end of Wednesday’s close, the rupee was quoted at 95.68 (provisional), down 2 paise from its previous closing.
On Tuesday, the rupee depreciated 44 paise to close at 95.70 against the US dollar.
“We expect the rupee to trade with a negative bias on renewed tensions between the US and Iran and concerns over military action in the Middle East.
“However, softening of crude oil prices may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 95.50 to 96.10,” said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.07, down 0.10 per cent.
“Uncertainty around the Strait of Hormuz is keeping DXY well supported via safe haven demand,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Brent crude, the global oil benchmark, was trading down 3.02 per cent at USD 96.57 per barrel in futures trade.
On the domestic equity market front, Sensex declined 141.90 points to settle at 75,867.80, while the Nifty dipped 6.55 points to 23,907.15.
Foreign institutional investors offloaded equities worth Rs 2,407.87 crore on Tuesday, according to exchange data.