Rupee cuts the 5-day short win streak; down 1 paise to 70.87 against the dollar

MUMBAI: breaking his five-day winning career, the rupee on Tuesday fell 1 paise to close at 70.87 against the American dollar before the signing of the trade agreement between the United States and China and the weak macroeconomic data on the domestic front.

The national currency opened with a strong note in line with other Asian peers after the United States removed the currency manipulator label it imposed on China last summer on Monday.

However, weak macro data weighed, rising crude oil prices and strengthening the US currency in the foreign market dragged the internal unit down.

Higher than expected retail and wholesale inflation weighed on Indian bonds, as MPC can pause the rate at the next meeting. The yield on 10-year reference bonds rose 6 bp to 6.65 percent, said V K Sharma, director of PCG and capital markets strategy, HDFC Securities.

Wholesale inflation increased to a maximum of eight months from 2.59 percent in December compared to 0.58 percent in November due to the sharp increase in the prices of food items.

Retail inflation rose sharply to 7.35 percent in December 2019, exceeding the comfort level of the RBI, mainly due to high food prices.

"Rupee after rising for fifth successive session fell against the American dollar following slowing FII fund inflow," said Gaurang Somaiyaa, forex & bullion analyst, Motilal Oswal Financial Services.

Foreign investors downloaded net worth of Rs 205 crore on a net basis on Tuesday, provisional exchange data showed.

The dollar index, which measures the strength of the dollar against a basket of six currencies, rose 0.07 percent to 97.41.

Brent crude futures, the global benchmark for oil, rose 0.64 percent to trade at $ 64.61 per barrel.

The 10-year government bond yield was 6.67 percent on Tuesday.

In the domestic market, the BSE sensex of 30 shares reached a record high of 41,994.26 in daily trade. Finally, 92.94 points or 0.22 percent higher were set at 41,952.63, its historical maximum close.

The broader Nifty climbed its lifetime maximum (intraday) of 12,374.25, before finishing 32.75 points, or 0.27 percent, higher at 12,362.30, a record close level.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee /dollar at 70.8115 and for rupee /euro at 78.8019. The reference rate for rupee /British pound was fixed at 92.2598 and for rupee /100 Japanese yen at 64.59.