Mumbai, Dec 9 (PTI) The rupee pared its initial losses and settled for the day in the positive territory, up 17 paise at 89.88 (provisional) against the US dollar on Tuesday, as American currency and crude
oil prices retreated from their elevated levels.
Forex traders said the weakness of the US dollar in the overseas market, amid expectations of a US Fed rate cut in December, supported the rupee at lower levels.
However, a negative trend in domestic equities and foreign fund outflows weighed on investor sentiment, limiting the local unit's appreciation.
Moreover, investors are in a wait-and-watch mode, and market participants are awaiting clarity from the US Federal Reserve before taking decisive positions.
At the interbank foreign exchange market, the rupee opened at 90.15 against the US dollar, down 10 paise from its previous close. The domestic unit recovered losses and settled for the day in the positive territory at 89.88 (provisional), up by 17 paise from its last close.
On Monday, the rupee settled at 90.05 against the US dollar.
Anuj Choudhary, Research analyst, Mirae Asset ShareKhan, said the rupee recovered from lower levels on likely intervention by the RBI and overnight decline in crude oil prices. However, weak domestic markets and a slight recovery in the US dollar index capped sharp gains.
"US Dollar is also expected to remain weak on expectations of rate cut by the Fed in December. Any further intervention by the central bank may also support the rupee. USD-INR spot price is expected to trade in a range of Rs 89.50 to Rs 90.30," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 per cent lower at 98.98.
Brent crude, the global oil benchmark, was trading 0.27 per cent lower at USD 62.33 per barrel in futures trade.
Forex traders said investors' focus has now shifted to the Fed's policy outcome on December 9-10. Markets are placing nearly a 90 per cent probability on a rate cut next week.
Meanwhile, India and the United States will commence three-day talks on the first phase of their proposed bilateral trade agreement here from December 10.
On the domestic equity market front, Sensex dropped 436.41 points to settle at 84,666.28, while the Nifty fell 120.90 points to 25,839.65.
Foreign Institutional Investors sold equities worth Rs 655.59 crore on Monday, according to exchange data. PTI DRR HVA
