The rupee depreciated 19 paise to 85.15 against the US dollar in early trade on Wednesday, driven by renewed geopolitical tensions and increased demand for the US dollar, which together exerted pressure on the local unit. Forex traders said geopolitical tensions between India and Pakistan have sparked risk-off sentiment in the market leading to the rupee weakness.
However, foreign fund inflows and crude oil prices cushioned the downside for the domestic unit.
At the interbank foreign exchange, the domestic unit opened at 85.15 against the greenback, registering a fall of 19 paise over its previous close.
On Tuesday, the rupee gained 27 paise to settle at 84.96 against the US dollar.
"Looking ahead, the rupee is expected to find immediate support in the 84.90-85.00 range, with a slight upward bias, moving towards the 85.80-86.00 levels in the near term," CR Forex Advisors MD Amit Pabari said.
Meanwhile, amid rising tensions between India and Pakistan, the US has called on both countries "not to escalate" the conflict. Secretary of State Marco Rubio will speak to foreign ministers of both countries."
US State Department Spokesperson Tammy Bruce at a press briefing on Tuesday said that Washington is reaching out to both India and Pakistan "regarding the Kashmir situation" and telling "them not to escalate the situation."
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.11 per cent at 99.34.
Brent crude, the global oil benchmark, fell 1.11 per cent to USD 63.54 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex advanced 165.90 points or 0.21 per cent to 80,454.28, while the Nifty rose 51.30 points or 0.21 per cent to 24,387.25.
Foreign institutional investors (FIIs) bought equities worth Rs 2,385.61 crore on a net basis on Tuesday, according to exchange data.
Meanwhile, India and the US are exploring opportunities for an interim trade arrangement in goods to secure an "early mutual win" ahead of finalising the first phase of the proposed bilateral trade agreement by the fall of this year.
The commerce ministry said on Tuesday that both countries have initiated sectoral-level talks and more engagements are planned from May-end.
On the domestic macroeconomic front, a finance ministry report on Tuesday said with the right strategies in place, continued domestic reforms, and a strong focus on infrastructure development and job creation, the economy can demonstrate resilient growth despite global uncertainties.
Source Name : Economic Times