Currency Market Update: Rupee plunges 14 paise to 83.91 against US dollar

The Indian rupee nosedived 14 paise to 83.91 (provisional) against the US dollar on Wednesday amid unabated outflow of foreign capital and volatile domestic equity markets.

Forex traders said a weak American currency and lower level of crude prices, however, cushioned the local unit at lower level.

At the interbank foreign exchange, the rupee opened weak at 83.79 and touched the intra-day low of 83.94 against the greenback. The unit finally settled at 83.91 (provisional) against the dollar, registering a loss of 14 paise from its previous days' closing level of 83.77.

The rupee settled 10 paise higher at 83.77 against the American currency on Tuesday, a day after gaining 8 paise.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee declined on recovery in US dollar index and US treasury yields.

"FII outflows also weighed on the rupee. However, weak crude oil prices cushioned the downside." He said the rupee is expected to trade with a slight negative bias due to recovery in the US dollar and geopolitical tension in the Middle East.

"USD-INR spot price is expected to trade in a range of Rs 83.70 to Rs 84.20," Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.09 per cent at 101.38.

Analysts said the dollar index is at its seven-month low level amid concerns over upcoming PMI data from the US and Federal Reserve Chair Jerome Powell's speech at Jackson Hole Symposium later this week.

Brent crude, the global oil benchmark, rose 0.40 per cent to USD 77.51 per barrel.

On the domestic equity market front, Sensex rose 102.44 points, or 0.13 per cent, to close at 80,905.30 points. The Nifty went up 71.35 points, or 0.29 per cent to 24,770.20 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Tuesday, offloading shares worth Rs 1,457.96 crore, according to exchange data.