The Indian rupee settled weaker on Tuesday, as it slipped by seven paise to close at 86.95 against the US dollar, according to data shared by news agency Bloomberg. The domestic currency had closed at 86.88 against the greenback on Monday.
Earlier on Tuesday, the rupee had opened five paise weaker at 86.93 against the dollar. It shed more weight as the session drew to a close.
Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP, attributed the rupee’s depreciation against the dollar to the continued sell-off of equities by foreign portfolio investors.
The support provided to the local currency by the Reserve Bank of India is tapering off slowly, he added.
The US dollar index was at 106.935, up 0.34%, whereas global crude benchmark Brent crude was up 0.9% at $75.9 per barrel.
Traders were weighing tariff worries and the path to US rate cuts, while the Japanese yen held on to its gains as strong data bolstered odds of Bank of Japan raising rates in its meeting in April, according to Bhansali.
Investors will focus on Wednesday’s release of Fed meeting minutes to gauge how policymakers have sought to weigh the risk of broader tariffs in the wake of US President Donald Trump’s trade policies.
Trade policy uncertainty is at a record high and given that labour market is solid, there appears to be no need to cut rates imminently, Bhansali said. An extended pause during the first half seems justified as it gives Fed time to assess impact of trade measures on inflation, he added.
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