At the interbank foreign exchange market, the rupee opened at 90.56 against the US dollar, then lost some ground to touch 90.62, registering a loss of 6 paise over its previous close.
In the initial trade, the rupee also touched 90.46 against the American currency.
On Tuesday, the rupee pared initial losses and settled on a positive note, higher by 10 paise at 90.56 against the US dollar.
Forex traders said that while markets initially welcomed the India-US trade deal, fresh concerns have emerged after the White House released its fact sheet.
The fact sheet highlights key terms of the agreement, including that India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products. This includes dried distillers’ grains, red sorghum, tree nuts, and fresh and processed fruit. Certain pulses, soybean oil, wine and spirits, and additional products, and India has committed to buy more American products and purchase over USD 500 billion of US energy, information and communication technology, agricultural, coal, and other products. “The US document goes a step further than the February 6 joint statement by explicitly mentioning tariff reductions on additional American agricultural products, including certain pulses. This is a sensitive area for India – both politically and economically,” CR Forex Advisors MD Amit Pabari said in a note.
Pabari said, “In the near term, the 90.00-90.20 zone continues to act as a strong support for the rupee. As long as this area remains intact, USD/INR could slowly move higher, with the 91.00-91.20 range emerging as the next potential upside zone in the coming sessions.”
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.14 per cent lower at 96.66.
Brent crude, the global oil benchmark, was trading 0.78 per cent higher at USD 69.34 per barrel in futures trade.
For India, as a major oil-importing country, higher crude prices mean a heavier import bill. And a heavier import bill almost always translates into pressure on the rupee, even if the impact is gradual, Pabari said.
On the domestic equity market front, Sensex rose 141.21 points to 84,415.13 in early trade, while Nifty advanced 51.95 points to 25,987.10.
On Tuesday, foreign institutional Investors purchased equities worth Rs 69.45 crore, according to exchange data.
