MUMBAI: The rupee depreciated 9 paise to close at 86.43 against the US dollar on Wednesday, dragged down by risk-off sentiments and elevated crude oil prices.
Forex traders said the rupee dwindled amid weak domestic equity markets and the broad strength of the dollar.
Moreover, elevated global crude oil prices and selling pressure from foreign investors also weighed on the local unit, they said, adding that the domestic markets are falling on risk aversion in the global markets amid the ongoing geopolitical tensions in the Middle East.
At the interbank foreign exchange, the domestic unit witnessed heavy volatility. It opened at 86.42 against the greenback and touched an intra-day high of 86.25 and a low of 86.57 against the greenback during the day.
At the end of Wednesday’s trading session, the local unit was at 86.43, down 9 paise over its previous closing price.
On Tuesday, the rupee declined 30 paise to at 86.34 against the greenback.
“We expect the rupee to trade with a negative bias on risk aversion in the global markets and worries over rising crude oil prices. Escalating geopolitical tensions in the Middle East may weigh on the rupee.
“However, any de-escalation of tensions may see a recovery in the global risk assets. Traders may take cues from weekly unemployment claims data from the US. Traders may also await the Federal Open Market Committee (FOMC)
meeting outcome.
The US Federal Reserve is expected to keep interest rates unchanged. USDINR spot price is expected to trade in a range of 86.15 to 86.90,” said Anuj Choudhary - Research Analyst at Mirae Asset Sharekhan.