Rupee slips marginally to 71.31 as weak macro data, fall in equities weigh

The rupee on Thursday slipped marginally to close at 71.31 against the US dollar as weak macro-economic data disappointed market participants.

Forex traders said disappointing macro economic numbers and weak domestic equities weighed on the local unit, while easing crude oil prices and weakening of the American currency in the overseas market restricted the fall to some extent.

Government data on Wednesday showed that industrial output contracted by 0.3 per cent in December, while retail inflation jumped to a 68-month high of 7.59 per cent in January on high food prices.

At the interbank foreign exchange market, the rupee opened at 71.35, then lost further ground to touch a low of 71.49.

 

The domestic unit finally settled at 71.31 against the US dollar, showing a loss of 2 paise over the last close.

"Rupee continued to consolidate in a narrow range but came under pressure after data released on the domestic front was weaker-than-expectation," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Somaiyaa further said, "from the US, market participants will be keeping an eye on inflation number and better-than-expected number could extend gains for the greenback. We expect the USDINR(Spot) to quote in the range of 71.20 and 71.80."

Meanwhile, global crude oil benchmark Brent Futures fell 0.81 per cent to trade at USD 55.34 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.08 per cent to 98.97.

Broadly, crude prices have seen some moderation in the past few sessions over demand slump amid rising coronavirus cases in China and other regions.

The 10-year Indian government bond yield was at 6.43 per cent.

On the domestic equity market front, the BSE gauge Sensex fell 106.11 points or 0.26 per cent to settle at 41,459.79. The index swung between a high of 41,709.30 and a low of 41,338.31 during the day. Likewise, the NSE benchmark Nifty dropped 26.55 points or 0.22 per cent to close at 12,174.65.

Provisional data showed that foreign institutional investors bought equities worth Rs 1,061.39 crore on a net basis on Thursday.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.2580 and for rupee/euro at 77.7373. The reference rate for rupee/British pound was fixed at 92.3157 and for rupee/100 Japanese yen at 64.86.