Rupee Closes Weaker Against US Dollar For Two Days In A Row

Rupee continued to weaken against the US dollar, as it slipped for a second day in a row on Tuesday. The domestic currency weakened by 19 paise to settle at 86.53 against the greenback.

Earlier on Tuesday, the rupee had opened on a weak note against the American counterpart, sliding by 16 paise against the previous close of 86.50.

Notably, the rupee had weakened by 13 paise on Monday to settle at 86.34.

In contrast, the Indian currency had strengthened last week, closing 26 paise higher at 86.21 on Friday, according to Bloomberg data.

In a bid to support liquidity in the banking system, the Reserve Bank of India announced a set of special measures on Monday. These include open market operations purchases, longer-tenure variable rate repo auctions, and interventions in the foreign exchange market. These measures are expected to infuse about Rs 1.5 lakh crore of liquidity into the banking system.

Anil Kumar Bhansali, executive director at Finrex Treasury Advisors LLP, recommended that exporters should consider hedging small amounts near the 86.60 level. For importers, his advice is to buy on dips.

Despite a slight recovery last week, the rupee continues to face pressure amid the exit of overseas investors in the equity market. Foreign portfolio investors have been selling Indian equities while buying US dollars, which has caused the rupee to fluctuate between 86.20 and 86.45, Bhansali said. This range is expected to continue as FPIs persist with their dollar buying, he added.