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Rupee slips 19 paise to 71.47 against dollar in early trade on weak opening in domestic equities; falling oil prices support local unit

Press Trust of India

Mumbai: The rupee opened on a weak note and declined by 19 paise to 71.47 against the US dollar in opening trade on Thursday, tracking weak opening in domestic equities, even as crude oil prices eased.

Forex traders said most Asian currencies declined after the US Federal Reserve kept its key policy rates steady.

"Federal Open Market Committee (FOMC) kept interest rates unchanged at 1.5-1.75 percent and gave a positive picture of the US economy.

Representational image. Reuters.

Representational image. Reuters.

"However, Fed Chairman Jerome Powell expressed concern over inability to get inflation to the 2 percent level and the fact that coronavirus can be the new risk on the horizon. This led to a safe-haven demand in dollar index and we saw a gap up opening in USD/INR spot," said Rahul Gupta, head of research - currency, Emkay Global Financial Services.

The rupee opened weak at 71.39 at the interbank forex market and then fell further to 71.47, down 19 paise over its last close.

The rupee had settled at 71.27 against the US dollar on Wednesday.

Market participants further said that factors like weak opening in domestic equities and foreign fund outflows weighed on the local unit, while easing crude oil prices supported the local unit.

Brent crude futures, the global oil benchmark, fell 1.07 percent to $59.17 per barrel.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,014.27 crore on Wednesday as per provisional data.

Domestic bourses opened on a negative note Thursday with benchmark indices Sensex trading 229.23 points down at 40,969.43 and Nifty down 49.90 points at 12,079.60.

Forex traders said market participants are assessing the economic implications of the coronavirus outbreak and awaiting cues from the Union Budget.

"If the rapid spread of the virus becomes a global emergency then we can see USD/INR spot to rallying towards 71.80/72.00 zone.

Meanwhile, we have the Union Budget this weekend, ahead of which spot may remain on an edge," Gupta said.

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