The rupee appreciated by 29 paise to 71.59 against the dollar on Wednesday amid easing crude oil prices. After starting the session at 71.74 against the greenback, the rupee climbed to as high as 71.59 in afternoon deals compared with its previous close of 71.85. However, it gave up some of those gains and was last seen trading at 71.64 against the US currency. Sharp losses in domestic equity markets amid continued foreign fund outflows kept the gain in rupee in check, according to analysts.
Stock market benchmark indices S&P BSE Sensex and NSE Nifty extended losses to the fourth session in a row to hit their lowest intraday levels recorded since February 3.
International crude oil prices gave up early gains and extended losses for the fourth day in a row on Wednesday, amid fears of a coronavirus pandemic affecting world growth.
Brent crude - the global benchmark for crude oil prices - was last seen trading 0.6 per cent lower at $54.64 per barrel.
On Tuesday, the Reserve Bank of India (RBI) announced two additional tranches of three-year long-term repo operations (LTROs) worth Rs 25,000 crore each on March 2 and March 9.
That was part of the central bank's plan at its sixth bi-monthly policy review this month to launch repurchase agreements worth Rs 1 lakh crore, aimed at enabling commercial banks to reduce their lending rates.
The rupee has remained reasonably stable in the past 2-3 trading sessions compared to other emerging market peers, said Amit Pabari, managing director at forex advisory firm CR Forex Advisors.
“Volatility in the currency remains quite low as reflected on the extent of global risk-off… It is most likely that the pair will not depreciate beyond its one-year high of 72.40 levels until March 2020,” he said.
Meanwhile, foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 2,315.07 crore worth of funds on Tuesday, according to provisional data from the NSE.
The rupee may continue to outperform Asian peers on account of relatively weaker trade linkage with China compared to other Asian economies, lower crude prices and month-end selling by exporters, another forex advisory firm, IFA Global, said in a note.