Rupee recovers from all-time low to settle 4 paise higher at 84.68 against US dollar

Mumbai, Dec 3 (PTI) The rupee recovered from its all-time low level and settled for the day with gains of 4 paise at 84.68 against the US dollar in a range-bound trade on Tuesday, amid a positive trend in domestic equities.

Forex traders said the rupee has been on a downtrend largely on the back of Donald Trump’s rhetoric on BRICS currency, political instability in the Eurozone, weaker domestic macroeconomic indicators and unabated foreign portfolio outflows.

US President-elect Trump on Saturday threatened a 100 per cent tariff on BRICS nations, if they act to undermine the US dollar.

Moreover, market participants are also awaiting cues from the upcoming RBI monetary policy on December 6, which will likely focus on balancing inflation and growth.

At the interbank foreign exchange, the rupee opened at 84.75 and moved in a narrow range and touched an intra-day high of 84.64 and an all-time low of 84.76 against the greenback. The unit ended the session at 84.68 against dollar, registering a gain of 4 paise from its previous close.

On Monday, the rupee depreciated 12 paise to close at an all-time low of 84.72 against the dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee recovered on reports of intervention by the Reserve Bank of India (RBI) and strength in the domestic equities, while the US Dollar gained on Donald Trump’s 100 per cent tariff threat on BRICS.

“Traders may take cues from JOLTS job openings data from the US. USD-INR spot price is expected to trade in a range of 84.45 to 84.90,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.18 per cent at 106.25.

Brent crude, the global oil benchmark, rose by 1.11 per cent to USD 72.63 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex closed 597.67 points, or 0.74 per cent higher, at 80,845.75. The Nifty rose 181.10 points, or 0.75 per cent, to settle at 24,457.15.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 3,664.67 crore, according to exchange data.

Meanwhile, Minister of State for Finance Pankaj Chaudhary on Monday said in Parliament that the rupee remains one of the best-performing Asian currencies despite geopolitical tensions in the Middle East and other headwinds, indicating India’s sound economic fundamentals.

One of the main reasons for the depreciation of INR has been the broad-based strength of the USD, he said.

“During CY 2024, dollar Index has increased by about 4.8 per cent till November 19, 2024. More recently, the dollar index touched 108.07 on November 22, 2024, its highest in more than a year, exerting pressure on emerging market currencies,” he said.

Further, geopolitical tensions in the Middle East and uncertainty surrounding US elections results also added to the headwinds.

The depreciation of a currency is likely to enhance export competitiveness, which in turn impacts the economy positively. On the other hand, depreciation may raise the prices of imported goods.

He further said, the RBI monitors key developments across the globe, which may have an impact on USD-INR exchange rate.