Mumbai: The rupee consolidated in a narrow range and settled for the day higher by 1 paisa at 84.90 (provisional) against the US dollar on Tuesday, weighed down by disappointing trade balance data and weak domestic markets. Forex traders said the rupee is likely to remain under pressure due to concerns over slowdown in the economy and dollar demand from importers and foreign banks.
At the interbank foreign exchange, the rupee opened at 84.89 and touched an all-time low of 84.93 against the greenback during intra-day trade. The unit finally ended the session marginally higher by 1 paisa at 84.90 (provisional) against the dollar. On Monday, the rupee depreciated 11 paise to close at an all-time low of 84.91 against the US dollar.
"We expect the rupee to trade with a negative bias on weak domestic markets and concerns over slowdown in the economy. A strong US dollar and FII outflows may further weigh on the rupee," said Anuj Choudhary -- Research Analyst at Sharekhan by BNP Paribas. On the domestic macroeconomic front, India's exports in November contracted 4.85 per cent year-on-year to USD 32.11 billion, while the trade deficit widened to an all-time high of USD 37.84 billion due to a record surge in gold imports.
The country's gold imports in November reached a record high of USD 14.86 billion, registering a four-fold increase, mainly on account of festival and wedding demands, according to commerce ministry data. Gold imports stood at USD 3.44 billion in November 2023.
"Traders may take cues from retail sales and industrial production data from the US. Investors may watch out for the Federal Open Market Committee (FOMC) meeting decision later this week. USDINR spot price is expected to trade in a range of 84.75 to 85.15," Choudhary added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.17 per cent at 107.03. Brent crude, the global oil benchmark, fell 0.49 per cent to USD 73.55 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex closed lower by 1,064.12 points, or 1.30 per cent, at 80,684.45 points. The Nifty was down 332.25 points, or 1.35 per cent, to 24,336.00 points.
Foreign Institutional Investors (FIIs) offloaded Rs 278.70 crore in the capital markets on a net basis on Monday, according to exchange data.
