Currency

Concerns about the impact of the coronavirus outbreak in China on world economy and sustained foreign fund outflows kept the rupee under pressure, say analysts.

Forex Market: Following the Chhatrapati Shivaji Jayanti holiday on Wednesday, the money markets will resume trading on Thursday, and will remain shut the next day for Mahashivratri.

After starting the session at 71.37 against the greenback, the rupee slid to as low as 71.49 by afternoon as against its previous close of 71.33. It was last seen trading down 14 paise - or 0.21 per cent - at 71.48 against the US currency.

Foreign institutional investors sold equities worth Rs 184.58 crore on a net basis on Monday, according to provisional exchange data.

Brent crude futures - the global benchmark for crude oil - were last seen trading 0.6 per cent higher at $55.27 a barrel, but were headed for a fifth weekly loss amid lingering fears over the impact of the virus.

The battered rupee will weaken further against the dollar over the coming year as a significant pickup in economic growth is unlikely.

Forex traders said rupee is trading in a narrow range amid amid fast-spreading coronavirus outbreak in China stoking fears about more trouble for the global economy.

Analysts say the markets are likely to remain volatile until the government presents the Union Budget on February 1, when it may also unveil more measures to lift growth.

Brent crude futures, the global oil benchmark, declined 1.36 per cent to $62.35 per barrel.

During the week, the domestic unit lost 14 paise. Global crude benchmark Brent was trading 0.51 per cent higher at USD 65 per barrel. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.17 per cent to 97.48. The 10-year Indian government bond yield was at 6.63 per cent.

The rupee gave up intraday gains on Thursday to close at 70.94 against the US dollar, after the US signed the first phase of a trade deal with China. After starting the day nearly unchanged at 70.80 against the dollar, the rupee edged higher before erasing all of the day's gains to decline to as low as 70.99 in late afternoon deals. As of Wednesdays close, the rupee has appreciated 0.76 per cent against the US dollar so far this year.

The rupee's gains were, however, remained restricted as investors turned a bit cautious ahead of the signing of phase 1 trade agreement between the US and China.

In the forwards market, the RBI said it had a net outstanding sell position of $6.1 billion as of end-November, down from $7.47 billion at the end of the previous month.

The rupee is expected to weaken over 1 per cent to 72.00 per dollar in a year, lining up with expectations in the wider poll for the dollar's dominance to continue.

The rupee was Asia's second-worst performer in 2019 despite about $18 billion inflow into Indian bonds and equities.