The rupee bounced back from the day's low level to settle almost flat at 73.57 against the US currency Tuesday helped by easing crude oil prices and increased dollar selling by banks and exporters.
The rupee opened weak at 73.74 and later fell to the day's low of 73.82 due to steady capital outflows amid deep losses in stock markets due to growing geopolitical concerns.
However, retreating crude oil prices which fell 1.93 per cent to USD 78.29 per barrel eased concerns and helped arrest a decline in the local currency, a dealer said.
Increased dollar selling by banks on the behalf of the Reserve Bank helped the rupee recover from losses. "Rupee pared losses and closed flat as crude oil prices retreated and dollar selling by state run lenders on behalf of RBI," V K Sharma, Head PCG & Capital Markets Group, HDFC Securities said.
Bond markets also arrested their decline as softer US yields supported the sentiment. The benchmark 10-year bond yield fell by 4 basis points, the most since October 16, to 7.89 per cent as investors cut down exposure to riskier assets.
The rupee settled at 73.57 per dollar, showing a loss of just 1 paise over the previous close. On Monday, the rupee had settled 24 paise lower at 73.56 against the US dollar.
Stock markets fell for the fourth day in a row tracking sluggish trend in global markets on geo-political tensions and fresh worries over trade war.
The 30-share BSE Sensex closed down 287.15 points or 0.84 per cent at 33,847.23.
Foreign investors took out more than Rs 850 crore from capital markets since Friday amid growing geopolitical tensions.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 73.7818 and for rupee/euro at 84.4743. The reference rate for rupee/British pound was fixed at 95.5568 and for rupee/100 Japanese yen was 65.62.
Meanwhile, stock markets slumped Tuesday on geopolitical risks stretching from US tensions with Russia and Saudi Arabia to trade issues and Italy's budget stand-off with the European Union.
European stocks picked up where Asia left off, with Frankfurt closing over two percent down, after Hong Kong closed down more than three percent.
Wall Street also saw sharp falls in the early hours of trading, although the Dow and Nasdaq held above the morning's worst levels approaching midday in New York.
Mixed US corporate earnings, prompting sharp falls in Dow members Caterpillar and 3M, added to geopolitical angst among investors, dealers reported.
"US equity markets turned sharply lower as investors turned chicken to the tune of some very risk-off mood music," said Neil Wilson at Markets.com.
The dollar was down versus the euro, yen and pound.
The price of gold, which is typically in demand in times of unertainty, rose by around one percent on the day.
Participating in Frankfurt's plunge was a share price drop in chemicals and pharmaceuticals giant Bayer after a San Francisco judge on Monday upheld a jury verdict that found Bayer-owned Monsanto liable for not warning a groundskeeper that its weed killer product Roundup might cause cancer.
Judge Suzanne Bolanos denied Monsanto's request for a new trial but cut the $289 million damages award to $78 million to comply with the law regarding how punitive damages awards must be calculated.Bayer said it would appeal the latest ruling.There is growing unease meanwhile about Italy's row with the EU over its purse-busting budget, which Brussels said breaks the bloc's financial rules.The populist government in Rome has refused to back down and cut its spending promises despite warnings about the country's economic outlook.On Tuesday, the EU Commission rejected Italy's draft budget, the first time the EU executive has ever sent a member state back to the drawing board over spending plans."We doubt that the Italian government will alter its budget sufficiently to placate the Commission, suggesting that the two remain on a collision course," Capital Economics said in a note to clients.Pressure is also growing on Saudi Arabia after it admitted that a journalist critical of Riyadh had been killed at its Istanbul consulate.Turkish President Recep Tayyip Erdogan on Tuesday said that the "savage murder" of journalist Jamal Khashoggi at the Saudi consulate in Istanbul was meticulously planned, demanding that all those linked to the killing face punishment.Oil prices slid Tuesday as the market discounted concerns about potential supply disruptions in the Middle East.Saudi Arabia said Monday it had no plans to repeat its harsh 1973 oil embargo, even as relations with the West sour following the death of Khashoggi.Earlier in Asia, sharp equity losses brought an end to a rally in previous sessions fuelled by China's top brass issuing coordinated statements of support for the country's markets and officials unveiling tax cut plans.Elsewhere, nerves have been tested by US President Donald Trump's warning that he will pull out of a nuclear treaty with Russia and bolster America's arsenal. (AFP)PMSPMS10232131NNNN
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