Rupee almost breaches 87/$, recovers with RBI ‘support’

Kolkata: The rupee retreated close to the 87-mark Tuesday in an attritional slide that mirrored broader overseas disinterest until Monday in Indian risk assets, which had a modest showing Tuesday relative to competing Asian markets where equity gauges logged robust gains either side of the Sea of Japan.

Dollar demand from importers also pressured the rupee, which has been buffeted by both portfolio rebalancing by overseas investors and the potential trade impact of higher tariffs by the US.

Net sales in the cash market by overseas investors crossed the ₹28,000-crore mark, despite nearly $500 million of provisional buying Tuesday, data showed. Unless the relentless selling that began toward the end of last year were to reverse, the rupee could lose further, dealers said.

The rupee opened at 86.9050 and weakened to 86.9875. Dealers said that the central bank intervened at this level to prevent the currency from breaching the 87 level.

“If it crosses the 87-mark, then 87.20 is very much on the cards,” another dealer said.

The currency closed at 86.95 vs dollar Tuesday, about 1% weaker as compared to Monday’s close of 86.8775.There was higher demand for the US currency from companies looking to accumulate dollars to cover their payables before the month end, a foreign currency dealer said.FIIs had sold local stocks worth ₹3,938 crore on a net basis Monday. In 14 trading sessions so far in February, overseas investors were net buyers for only 2 days, data from stock exchanges showed.

The dollar index, which has retreated from a high of 110, rose 0.35% to 106.95, showing the US currency’s strength against a basket of six currencies.