New Delhi: The Indian rupee bounced back from its lowest level and started trading 25 paise higher at 83.84 against the US dollar on Tuesday morning, following the recovery in the domestic stock market, despite strong dollar demand from foreign banks putting pressure on the rupee.
According to forex traders, investor sentiments were negatively affected by risk aversion in global markets, increasing geopolitical tensions in the Middle East, and foreign investors withdrawing their funds. In the interbank forex market, the domestic currency began at 83.92, reached a peak of 83.84, and saw a 25 paise increase from its record low close of 84.09 against the US dollar. The rupee dropped by 37 paise on Monday and reached a record low of 84.09 against the US dollar.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, mentioned that the rupee is being sold off in both positive and negative market conditions, showing a strong demand for the US dollar as foreign portfolio investors withdraw from the Indian equity market due to high valuation concerns.
In the meantime, the dollar index, measuring the strength of the US dollar against six other currencies, increased by 0.16 pc to reach 102.85 points. In futures trading, Brent crude, the worldwide oil standard, was priced at USD 77.15 per barrel due to concerns about escalating conflict in the Middle East potentially disrupting supplies, despite worries about a potential US economic downturn affecting demand in the largest oil consumer globally.
Also, Israel and the US are preparing for a major increase in tensions following Iran and Hamas promising to respond to Israel's killing of a Hamas Leader last week, according to traders. The BSE Sensex in the local stock market rose by 903.63 points (1.15 pc) to 79,663.03 points, with the Nifty also going up by 270.50 points (1.12 pc) to 24,326.10 points.
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