- Capital outflows too weighed on the domestic currency today
- On Monday, rupee dropped to a fresh closing low of 71.21
- FIIs sold shares worth a net of Rs 21.13 crore on Monday
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According to forex dealers, besides strong demand for the American currency from importers, capital outflows too weighed on the domestic currency today.
The US dollar strengthened against some currencies overseas as investors bid up safe haven assets amid tensions over global trade and strains in emerging market currencies.
A sharp rally in global crude prices further dampened the overall trading sentiment.
Benchmark Brent crude oil was trading at $78.05 a barrel.
Oil prices rose on Monday, supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November, but gains were limited by higher supply from OPEC and the United States, reported news agency Reuters.
On Monday, rupee dropped to a fresh closing low of 71.21 against the US dollar.
The rupee had risen as much as 23 paise during Monday's session, boosted by fresh selling of the US currency by exporters and banks, but strength in the dollar reversed the gains.
Domestic stock markets turned negative minutes after opening on positive note on Tuesday. At 9:40 am, the S&P BSE Sensex dropped 115.48 points or 0.30 per cent to trade at 38,197.04. The broader Nifty50 fell 45.15 points or 0.39 per cent to trade at 11,537.20.
Asian shares fell in early trade on Tuesday, amid growing concerns over escalating international trade disputes and as emergency austerity measures in Argentina highlighted turbulence in emerging markets.
Foreign institutional investors (FIIs) sold shares worth a net of Rs 21.13 crore on Monday, as per provisional data. (With agencies inputs)