Indian rupee, the domestic currency plunged 4 paise to 73.44 against the US dollar in opening trade on Tuesday, tracking weak Asian currencies, rebound in American currency and muted domestic equities.
The domestic unit opened at 73.42 per dollar at the interbank forex market and fell by 4 paise to 73.44 against the greenback over its previous close. On Monday, the rupee fell 16 paise to end at 73.40 against the US dollar.
Reliance Securities said in a research note,"Weak Asian currencies could continue to weigh on sentiment. However, foreign portfolio investor (FPI) flows into the domestic equity markets could cap losses. US dollar index extended gains this Tuesday morning in Asian trade against major peers as the prospect of massive fiscal stimulus pushed US yields higher."
Meanwhile, the dollar index, rose 0.12 per cent to 90.57 against a basket of six currencies.
Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking said," We are witnessing a reversal in the dollar index, while political stability in the U.S. and the probability of a further fiscal stimulus package has pushed the long-term U.S. yields higher. Moreover, there is a possibility that the Fed may reduce its bond-buying plan towards the end of this year, which could further push U.S. yields higher and consequently hurt the rupee. Back home, with RBI mopping up dollar inflows, the local currency can test 73.80 to 74 levels in the coming sessions. We expect the rupee to trade in a broad range of 73 to 74.20 levels for the rest of this month."
The euro, sterling and Japanese yen were flat against the US dollar this morning in Asian trade.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 81.23 points lower at 49,188.09, and the broader NSE Nifty was trading higher by 0.05 points at 14,484.80.
Foreign portfolio investors (FPIs) bought shares worth Rs 3,138.90 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 2,610.13 crore in the Indian equity market on 11 January, provisional data showed.
Brent crude futures, the global oil benchmark, declined 0.13 per cent to USD 55.59 per barrel. Oil price remained lack lustre as lockdown restrictions in major fuel consumers sparked concerns about demand.