Rupee skids for 3rd day, closes below 73 mark amid higher crude prices

At the interbank foreign exchange market, the rupee opened on a negative note at 73.13 per dollar as against its previous close of 72.90. It hovered in the range of 73.04 to 73.30 per dollar during the day before ending at 73.09.

The domestic currency has lost 64 paise in the three trading sessions to Wednesday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.35 per cent to 90.14.

''The Indian Rupee depreciated amid strong dollar and muted domestic markets. The US Dollar gained strength amid rise in US treasury yields and improved economic data from the US. Further, surge in crude oil prices added downside pressure,'' said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Additionally, market participants remained vigilant ahead of Reserve Bank of India (RBI) monetary policy meeting outcome scheduled to be announced on Friday.

''The central bank is likely to keep its interest rates untouched; more focus will be on statements to get hint on future monetary stance. Rupee may trade in the range of 72.50 to 73.50 in next couple of sessions,'' Mukadam added.

On the domestic equity market front, the BSE Sensex ended 85.40 points, or 0.16 per cent lower at 51,849.48, while the broader NSE Nifty rose 1.35 points or 0.01 per cent to close at 15,576.20.

Brent crude futures, the global oil benchmark, rose 1.12 per cent to USD 71.04 per barrel.

Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 449.86 crore, as per exchange data.

Meanwhile, India reported 1,32,788 new coronavirus infections taking the country's tally of COVID-19 cases to 2,83,07,832, while the daily positivity rate has further dropped to 6.57 per cent, according to the Union Health Ministry data updated on Wednesday. ''Stronger dollar index and higher crude oil prices weighed on Indian rupee which fell for the third day in row. Balancing between inflation and growth could be the biggest challenge for central banks in this policy meeting,'' said Dilip Parmar, Research Analyst, HDFC Securities.

Brent crude oil prices have sustained above USD 70 barrel after OPEC+ output meeting, while country's first quarter GDP could be hurt following lockdown/restriction by most of the states, Parmar said.

''Spot USDINR is having resistance at 73.30 and sustaining above this level will open ways for 73.70 while find support around 72.75,'' he noted.

According to Jateen Trivedi, Senior Research Analyst at LKP Securities, ''rupee traded weak towards 73.20 from 72.85, in the first half of day, the manufacturing index in the US provided crude positive trend which kept rupee on a weak note. Going ahead the rupee can be in range of 72.75-73.25.'' Stronger oil prices have also weighed on sentiments as Saudi Arabian officials said that they are satisfied with rising demand. So, the possibility of further strengthening of oil has also hurt sentiments, said Sriram Iyer, Senior Research Analyst at Reliance Securities.

Investors have turned cautious on the Indian economy. There are speculations that the Reserve Bank of India (RBI) will take measures to infuse liquidity in the markets while keeping the benchmark rates unchanged.

Meanwhile, India's exports touched USD 32 billion in May 2021, over 67 per cent higher than May last year and almost 8 per cent more than in May 2019.

Markets could now look for cues from the monetary policy meeting and non-farm payrolls number from the US on Friday, Iyer noted.