The Indian rupee weakened further against the dollar in early trades on Tuesday, 11 April 2017 as US rate hike fears come back to haunt participants. Fed officials' highly hawkish comments mainly soured forex market sentiment.
Increased dollar demand from importers also weighed down the currency. However, a higher opening in the domestic stock market limited the rupee losses.
The domestic currency opened at Rs 64.66 against the dollar and dipped to a low of 64.69 before recovering to a high of 64.575 so far during the day.
In the spot currency market, the Indian unit was last seen trading at 64.5950. Yesterday, the rupee had retreated after a three-session winning run and lost 28 paise to end at 64.56 against the dollar with simmering geopolitical tensions taking the centre-stage at the global level.
Domestic benchmark indices extended initial gains and hit fresh intraday high in morning trade on renewed buying. Indices are set to snap previous three sessions of losses. At 10:20 IST, the barometer index, the S&P BSE Sensex, was up 118.58 points or 0.4 percent at 29,694.32. The Nifty 50 index was up 26.10 points or 0.28 percent at 9,207.55.
Overseas, Asian stocks declined as rising tensions in the Middle East and political uncertainty in Europe kept investors on edge, underpinning safe assets such as the yen, gold and treasuries.
The upcoming French presidential election and the heightened tensions in the Middle East following the US strikes on Syria have left investors nervous even as a raft of global data over recent months have pointed to a steadily improving global economy. US stocks closed fractionally higher yesterday, 10 April 2017, amid geopolitical tensions while investors looked ahead to the start of earnings season.
Meanwhile, the dollar held weaker against the yen in Asia on Tuesday with remarks from the Fed chief that suggested rate hikes were likely sooner rather than later failing to lift the greenback and political risk aiding yen safe-have demand, while the Aussie held ground after a mixed business survey. The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, however edged up 0.03 percent to 100.97.
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