By Jaspreet Kalra
MUMBAI (Reuters) – The Indian rupee ended weaker on Tuesday, in line with broad weakness in Asian currencies, and pressured by U.S. dollar demand from oil companies and foreign banks.
The rupee ended at 83.3175, lower by 0.1% compared with its close at 83.2375 in the previous session.
The dollar index rose to 101.6 while Asian currencies retreated, with the Korean won leading losses down by nearly 1%.
While the rupee’s initial fall was prompted by weakness in its Asian peers, dollar demand from oil companies and foreign banks kept up the pressure on the local unit, a foreign exchange trader at a state-run bank said.
Benchmark Indian equity indices, the BSE Sensex and Nifty 50, ended in the red as selling pressure emerged after the indices touched record high levels on Monday.
Overseas investors bought a total of $10.1 billion worth of Indian equities and bonds in December but the rupee was unable to gain much as the Reserve Bank of India likely stepped in to absorb large inflows, traders said.
However, hopes of continued robust inflows have prompted some bullish calls on the rupee, with Goldman Sachs forecasting it may appreciate to 81 against the dollar over the next 12 months, according to a note on Tuesday.
In the near-term, investors await key U.S. economic data that will be released later this week. The ISM manufacturing purchasing managers’ index (PMI) will be released on Wednesday and the closely-watched non-farm payrolls data on Friday.
The data may “bring a bit of choppiness” to the market but the rupee is unlikely to stray significantly from its prevailing range between 83 and 83.40, Gaurang Somaiya, a FX analyst at Motilal Oswal Financial Services, said.
(Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)
