The rupee depreciated by 38 paise on Monday —its steepest single-day drop in over a month — to close at 87.33 against the US dollar because of volatile crude oil prices amid tariff uncertainties worldwide and unabated outflow of foreign funds.
A weaker American currency failed to support the local unit as a sell-off in the domestic equity market hit the sentiment adversely, forex traders said. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.09 per cent at 103.71 as of 7 pm on Monday.
At the interbank foreign exchange, the rupee opened weak at 87.24 and touched the day’s low of 87.36 amid intense volatility. The unit touched an intraday high of 87.16 before ending the session at 87.33 against the dollar.
The domestic currency had recorded a steep single-day loss of 39 paise against the dollar on February 5.
According to exchange data, foreign institutional investors (FIIs) offloaded equities worth ₹2,035.10 crore on a net basis on Friday.
The latest RBI data released on Friday showed the country’s forex reserves dropped by $1.781 billion to $638.698 billion in the week ended February 28. The overall forex kitty had jumped by $4.758 billion to $640.479 billion in the previous reporting week.
Indices pare gains
Benchmark stock indices Sensex and Nifty pared early gains to close lower in a volatile session on Monday, dragged by selling in industrials and oil and gas shares in the last hour.
The 30-share BSE Sensex declined 217.41 points, or 0.29 per cent, to settle at 74115.17 with 22 of its constituents ending lower and eight with gains.
The index had opened higher and touched a high of 74741.25 during the day. However, selling pressure emerged in the pre-close session, pulling the index down by 310.34 points, or 0.41 per cent, to a low of 74022.24.
The NSE Nifty declined by 92.20 points, or 0.41 per cent, to close at 22460.30.
“Global headwinds continue to drag the market sentiment, with the rise in US unemployment rates and tariffs leading to uncertainty, indicating that volatility is here to stay for the near term,” Vinod Nair, head of research at Geojit Financial Services, said.
Nair said the domestic macros are favouring investors to start accumulating the beaten-down stocks with caution in the short term, while the long term appears attractive.
“With the rupee depreciating sharply and foreign fund outflows showing no signs of cooling off, markets may continue to exhibit volatility,” Prashanth Tapse, senior VP (research) of Mehta Equities Ltd, said.
In Asian markets, Tokyo, Shanghai, Hong Kong and Seoul ended on a mixed note. European markets were trading lower in the mid-session deals. Wall Street settled on a positive note on Friday.
Global oil benchmark Brent crude rose 0.34 per cent to $70.60 a barrel.