Rupee settles 9 paise down at 71.12 against US dollar

Mumbai: The rupee weakened by 9 paise to close at 71.12 against the US dollar on Friday due to a steady rise in crude oil prices and strengthening of the greenback overseas. Forex traders said the rupee was weighed down against the US dollar after the RBI said it will conduct a special OMO in a move seen by market participants as an attempt to bring long-term yields lower.

At the interbank foreign exchange market, the domestic currency opened weak at 71.15, then went on to hit a low of 71.23 against the US dollar during the day.

It, however, gained some lost ground and finally settled at 71.12, showing a fall of 9 paise over its previous close. On Thursday, the local unit had settled at 71.03 against the greenback.

On a weekly basis, the rupee depreciated by 29 paise.

The Reserve Bank of India (RBI) on Monday will simultaneously purchase and sell government securities worth Rs 10,000 crore under a special Open Market Operation (OMO).

Such exercises are done by the central bank when the proceeds from sale of short-term securities are used to buy long-term government securities or bonds in a bid to bring down interest rates on long-term securities.

"Overall this month, USD/INR spot seesawed from 71.80 to 70.50, however, it has been observed that RBI has intervened in spot and did not let it fall below 70.50 zone," said Rahul Gupta, Head of Research- Currency , Emkay Global Financial Services.

Gupta further noted that for next week, there are no major events lined up and on account of Christmas holidays we will see lackluster movement in forex market. "We expect USD/INR to trade within 70.90-71.50 amid caution over US-China Phase-One trade deal," he said.

(image from moneycontrol.com)