Rupee falls 7 paise to 79.89 against US dollar

MUMBAI: The rupee declined by 7 paise to close at 79.89 (provisional) against the US dollar on Wednesday tracking a strong dollar in overseas markets and losses in the domestic equities.

At the interbank foreign exchange market, the domestic currency opened at 79.93 per dollar. It hovered in a range of 79.84 to 79.94 during the session.

The domestic unit finally settled at 79.89, down 7 paise over its previous close of 79.82.

Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas said that a strong dollar overseas hit the rupee sentiment.

The US Dollar surged as economic data from the US surprised the markets. The US ISM services PMI unexpectedly rose to 56.9 in August from 56.7 in July.

However, weak crude oil prices and foreign fund inflows cushioned the downside.

"We expect Rupee to remain weak on strong US Dollar and weak cues from global markets. Dollar index surged to a fresh 20-year high and is currently trading around 110.45 levels. Recovery in crude oil prices from lower levels may also weigh on rupee," Choudhary said.

USDINR spot price is expected to trade in a range of Rs 79 to Rs 80.50 in the next couple of sessions.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.16 per cent higher at 110.39.

Brent crude futures, the global oil benchmark, advanced by 0.54 per cent to USD 93.33 per barrel.

On the domestic equity market front, the BSE Sensex ended 168.08 points or 0.28 per cent lower at 59,028.91, while the broader NSE Nifty declined 31.20 points or 0.18 per cent to 17,624.40.

Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 1,144.53 crore, according to the exchange data.