Rupee Gains 14 Paise, Closes At 89.84 Against US Dollar

The rupee rose 14 paise to close at 89.84 (provisional) against the greenback on Tuesday primarily on account of dollar selling by the Reserve Bank.

Strong industrial output numbers supported the local unit, but a stronger greenback, higher global crude oil prices, and foreign fund outflows prevented sharper gains, forex traders said.

At the interbank foreign exchange, the rupee opened at 89.98 against the dollar and traded in the range of 89.72-89.98 during the day. The local unit eventually settled at 89.84 (provisional), up 14 paise from its previous close.

The rupee depreciated 8 paise to close at 89.98 against the US dollar on Monday.

"The rupee remained on the weaker side since morning, but later yielded to the constant selling by the RBI, which took it up to 89.72 before buyers came back and bought dollars. The rupee has been gravitating between 89.50 and 90 in the last few days, with the RBI for now protecting 90, but they will buy (dollars) at 89/89.20 to cover their short positions," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

He further cited strong Index of Industrial Production (IIP) data, which was released on Monday.

"The IIP came at a 25-month high of 6.7% for November against expectations of 2.5% and last month's growth of 0.5%. The growth during the year has been 3.30% against 2.70% in the last month," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally higher by 0.06% to 97.99.

Brent crude, the global oil benchmark, was trading 0.47% higher at $62.23 per barrel in futures trade, amid thin year-end trading and ongoing concerns about global demand.

On the domestic equity market front, the 30-share Sensex ended 20.46 points lower at 84,675.08, while the Nifty slipped 3.25 points to 25,938.85.

Foreign institutional investors offloaded equities worth Rs 2,759.89 crore on Monday, according to exchange data.