Rupee falls 12 paise to close at 94.93 against U.S. dollar

The rupee depreciated for the second consecutive day and fell 12 paise to close at 94.93 (provisional) against the U.S. dollar on Friday, pressured by rising crude prices and sluggish domestic equities, with ongoing Saudi-Houthi tensions threatening to keep oil markets volatile..

Forex traders said the rupee is likely to trade with a slight negative bias on global dollar strength and Brent crude prices hovering near $114 per barrel.

Renewed tensions between Yemeni Houthis and Saudi Arabia may continue to impact crude oil prices, they said, adding that the US dollar index recovered while 10-year U.S. Treasury yields slipped below the 5% mark.

At the interbank foreign exchange market, the rupee opened at 94.78 against the dollar, then lost ground to touch an intra-day low of 94.98 and finally settled for the day at 94.93 (provisional), registering a decline of 12 paise over its previous close.

On Thursday, the rupee slumped 43 paise to close at 94.81 against the U.S. dollar.

"We expect the rupee to trade with a slight negative bias on elevated crude oil prices amid escalation of tensions in the Middle East and weakness in domestic markets.

"Selling FIIs may also pressurise the rupee. However, softening of U.S. treasury yields and any fresh intervention by the RBI may support the rupee at lower levels," said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.

Traders may take cues from PMI data from the U.S. and India, Mr. Choudhary said, adding that USD-INR spot price is expected to trade in a range of 94.65 to 95.25.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 101.73, higher by 0.12%.

Brent crude, the global oil benchmark, was trading higher by 1.01% at $114.31 per barrel in futures trade.

On the domestic equity market front, Sensex declined 125.56 points to settle at 73,123.83, while the Nifty dropped 87.65 points to 22,600.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹3,458.70 crore on a net basis on Thursday, according to exchange data.

Forex traders said near-term dollar liquidity has improved following the Jio IPO.

Jio Platforms' IPO had drawn bids for 136.32 crore shares, against 19.75 crore shares on offer, by 12:03 p.m. on Friday. That is an overall subscription of almost seven times.

Institutional demand is leading. Qualified Institutional Buyers bid 70.85 crore shares against 4.90 crore reserved, or 14.46 times.

Domestic financial institutions (banks, FIs and insurers) accounted for 34.51 crore shares and foreign institutional investors for 26.95 crore. Mutual funds were much smaller at 4.40 crore.