Rupee drops to 1-week low amid border tension

The rupee depreciated by 25 paise to settle at more than one-week low of 73.60 against the US dollar on Tuesday amid growth concerns and fresh border tensions between India and China.

A rise in demand for the US currency from banks and importers and forex outflows weighed on the local currency, according to forex dealers.

According to provisional exchange data, foreign investors withdrew Rs 1,056.52 crore from the capital markets on Tuesday.

At the interbank forex market, the rupee opened on a tepid note at 73.63 and finally closed at 73.60 – the lowest closing level since August 31-  against the greenback, down 25 paise over its previous close. On Monday, the rupee had settled at 73.35 against the US dollar.

“The tension at Indo-China border also weighed on the rupee. If the situation along the border worsens, it can lead to further weakness in rupee,” said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.

He further noted that technically, spot USDINR is having resistance at 73.83 and support at 73.20.