Despite making a cautious recovery of 18 paise to 73.88 against the US dollar in early trade, Indian rupee today fell 33 paise to finish at a fresh lifetime low of 74.39 against the American currency. The domestic unit's decline was due to high crude oil prices, strengthening of the greenback and unabated foreign fund outflows, besides deepening trade tensions between the US and China.

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The rupee, which has fallen 14% so far this year, today fell for the sixth straight sessions. The domestic unit on Monday plummeted by 30 paise to close at 74.06. Traders reportedly said unabated foreign fund outflows weighed on the rupee.

Citing Forex dealers, PTI report said besides strong demand for the American currency from importers, concerns over rising fiscal deficit and capital outflows weighed on the rupee.

Global brokerage firm Nomura, in a research note, said, "The balance of payments (BoP) turning negative has led to a sharp depreciation in rupee in the past two months. With steep depreciation over the past two months, rupee is now the worst performing currency against the USD in Asia so far this year, down 13.4 per cent."

Nomura further stated that policy responses to the depreciating currency have been muted thus far and with limited policy response, the concerns on the rupee have risen significantly, adding "We believe a fall in oil prices will only possibly help stabilise rupee." 

V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, told PTI, "Interest rates are headed higher in the US. The US 10 year bond yields surged to 3.26 per cent. Fears that global investors will withdraw their funds from global markets and park in US treasuries is affecting the global markets. Crude oil prices also rose 1 per cent to USD 84.7." 

Earlier on Monday, provisional data showed that foreign institutional investors (FIIs) sold shares worth a net of Rs 1,805 crore. Investors reportedly remained concerned over sustained foreign capital outflows and rise in crude oil price to USD 84.48.

The BSE Sensex, however, erased all its early gains to close lower by 175 points in see-saw trade today, posting its fourth fall in five sessions. The 30-share Sensex opened higher at 34,651.82 points, but slipped into the negative zone to hit a low of 34,233.50 before concluding at 34,299.47, recording a fall of 174.91 points, or 0.51 per cent.

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The NSE Nifty after shuttling between 10,397.60 and 10,279.35 points, ended 47 points, or 0.45 per cent, lower at 10,301.05.