Mumbai: The rupee depreciated 5 paise to settle at 75.71 (provisional) against the US dollar on Wednesday, as market participants were concerned about rising tensions between the US and China amid coronavirus pandemic.
Forex traders said the rupee was trading in a narrow range as positive domestic equities, rising optimism about a potential coronavirus vaccine and a revival of business activities were offset by a flare-up in US-China tensions.
Moreover, strengthening of the American currency overseas also weighed on the domestic unit.
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At the interbank forex market, the rupee opened strong at 75.72 and gained marginal ground to finally closed at 75.71, down 5 paise over its last close.
It had settled at 75.66 against the US dollar on Tuesday.
During the session, the local unit witnessed an intra-day high of 75.57 and a low of 75.74.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.17 percent to 99.08.
“Rupee is trading in a very tight range, and not breaking the psychological level of 76. There is some optimism in the forex market over coronavirus vaccine and foreign inflows pertaining to Bharti Airtel Telecom stake sale, Kotak Mahindra Bank QIP or Reliance Jio but it’s getting offset by the escalating US-China trade tensions.
“US President Donald Trump has already said that he is preparing against China over his efforts to impose national security on Hong Kong. The global growth is already in doldrums due to COVID-19, worsening relations between these two nations will further hobble growth,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.