Rupee opens 9 paise lower at 70.88 against US dollar

The rupee on Wednesday opened 9 paise lower at 70.88 against the US dollar.

On Tuesday, the domestic unit recovered by 8 paise to close at 70.79 on increased selling of the greenback by exporters and softening crude oil prices.

Forex traders said the rupee's rise was supported by dollar-selling by exporters and banks after the Chinese foreign ministry announced a mutually beneficiary agreement with the US.

Gaurang Somaiya, currency analyst at Motilal Oswal Investment Services, says the currency will trade in the range of 70.70 and 71.50. Market participants will be keeping an eye on the preliminary GDP data and better-than-expected growth number could extend gains for the greenback. Pound remained under pressure after Trump said the agreement on the United Kingdom’s departure from the European Union may make trade between the United States and Britain more difficult. "We expect that major crosses could continue to trade with a negative bias as uncertainty continues to prevail regarding Brexit," Somaiya added.

In the money market, government bonds were unchanged in the previous session while a slump in oil prices and a gaining rupee increased the attractiveness of domestic debt. A cool down in US yields is also positive for emerging market (EM) debt, including India.

Foreign institutional investors (FII) were net buyers to the tune of Rs 2.86 billion on November 26, 2018. FIIs have been net buyers of the more than Rs 97.94 billion in November 2018.