The rupee saw higher volatility in early morning trade on Wednesday, as support from positive domestic stocks was weighed down by significant pressure from global uncertainty prompting investors to adopt a cautious approach.
Forex dealers said overall uncertainty about the global economy continued to weigh on both currencies and commodities, keeping investors on edge.
On the interbank foreign exchange, the rupee opened at 86.56, and fell as low as 86.71 against the greenback in a highly volatile morning session.
On Tuesday, the rupee fell by 13 to 86.58 against the US dollar.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading up 0.07 percent at 108.13.
Brent crude, the global oil benchmark, rose 0.09 percent to USD 79.36 per barrel.
Domestically, Indian markets have faced significant pressure from global uncertainty, and foreign investors have sold more than USD 7 billion this month, depressing the rupee and Indian markets, said CR Forex Advisors MD Amit Pabari.
“However, there is continued cash flow and a better budget and the fall in crude oil prices may provide much needed support to the rupee. However, with the Union Budget around the corner, market volatility may continue as traders remain cautious,” Pabari said.
Looking ahead, the USD/INR pair is expected to trade between 86.20 and 86.80, as markets remain cautious amid ongoing global uncertainty, he added.
On the domestic equity market front the 30-share sentiment index Sensex opened on a positive note and was trading 224.31 points or 0.30 per cent higher at 76,062.67 in early trade. Similarly, the broader-based Nifty was trading higher by 37.70 points or 0.16 percent at 23,062.35.
Foreign Institutional Investors (FIIs) remained the biggest sellers in the capital markets on Tuesday, as they sold shares worth Rs 5,920.28 crore, according to exchange data.
