The Rupee skidded 9 paise to close at 75.02 against the US dollar on Wednesday amid rising crude oil prices and a firm greenback. While foreign fund inflows supported the rupee, factors like a strong dollar, volatile domestic equities and rising COVID-19 cases dragged the local unit down, forex traders said.
The rupee opened on a positive note at 74.88 at the interbank forex market and shuttled between 74.87 and 75.05 during the session. It finally ended at 75.02 per US dollar, down 9 paise over its previous close.
It had settled at 74.93 against the US dollar on Tuesday.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.01 per cent to 96.89.
On the domestic equity markets front, the 30-share BSE Sensex closed 345.51 points, or 0.95 per cent, lower at 36,329.01. The broader NSE Nifty shed 93.90 points, or 0.87 per cent, to finish at 10,705.75.
Foreign institutional investors were net buyers in the capital markets as they purchased shares worth Rs 829.90 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.32 per cent to USD 43.22 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.18 crore and the death toll has topped 5.44 lakh.
In India, the death toll due to the disease rose to 20,642 and the number of infections increased to 7,42,417 on Wednesday, according to the health ministry.
"The USD/INR spot has been respecting the 75.05 resistance as traders are hopeful about additional government and central bank stimulus from major economies.
"However, until then in the absence of major economic data, the coronavirus and geopolitical fears will keep risk sentiments under check," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta further said "the US-China trade tiff is escalating with Trump considering to ban TikTok app as a retribution against China for coronavirus pandemic."
Secretary of State Mike Pompeo has said the US is taking the threat posed by Chinese social media apps like TikTok very seriously and is "certainly looking" at banning them.
According to Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities, the "rupee market believes that the recent large periodic FDI flows may have already materialised while importers and state run banks buying led to weakness in the rupee in last three days."
Vakil further said the momentum in pound and euro will decide the trend for the dollar index in the next few days.
"Brexit talks restarted today, market report says the EU is ready for compromise over fishing rights. Pound is little higher from overnight close, however the momentum will depend on the official statements," he noted.
Meanwhile, the Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 74.8609 and for rupee/euro at 84.6113. The reference rate for rupee/British pound was fixed at 93.4868 and for rupee/100 Japanese yen at 69.60.