Rupee plunges 31 paise to nearly 1-month low on trade worries

Mumbai: The rupee on Tuesday dived 31 paise to end at a nearly one-month low against the US currency due to heavy dollar buying amid fresh concerns over the progress of China-US trade talks.

Crude oil prices dropping more than half a per cent and gains in the equity markets, however, helped the local unit contain losses.

The rupee closed at 71.54 to the dollar, down by 31 paise or 0.44 per cent -- the biggest one day loss in this month. This is the lowest closing level since September 17 when the rupee had closed at 71.78 to the dollar.

Investor caution returned as reports suggested that China wanted more talks this month before agreeing to a deal with the US for settling trade issues. Chinese yuan also pared gains on fading hopes of a 'phase one' agreement between the two major economies as pitched by US President Donald Trump.

The US dollar also advanced against the major global currencies with the dollar index gaining 0.07 per cent to 98.52 despite a surge in British pound.

The British pound rose around 0.7 per cent to near levels not seen since July after the EU's top Brexit negotiator opined that a divorce deal could be possible this week.

Crude oil prices retreated for a second day after weak Chinese trade data and fresh concerns over the Sino-US trade talks.

Global benchmark Brent crude dropped more than 0.50 per cent to USD 58.99 per barrel.

Indian stocks also advanced for the third session in a row on hopes of consumer demand revival in the upcoming festive season. Sensex gained 291.62 points or 0.76 per cent to end at 38,506.09 –a two-week high for the index. Nifty rose by 87 points or 0.77 per cent to settle at 11,428.30.