Rupee recovers from record low to settle 4 paise higher at 85.87 against US dollar

The rupee recovered slightly from its record low and settled with a gain of 4 paise at 85.87 (provisional) against the US dollar on Thursday amid firm American currency and elevated level of crude oil prices.

According to forex analysts, relentless selling in domestic equities and outflow of foreign capital kept the local unit under pressure, while the dollar strengthened on improved macroeconomic prospects in the US.

They said, uncertainties related to trade restrictions ahead of the change in US administration under President Donald Trump continued to fuel dollar demand, while concerns over Federal Reserve's move to delay interest cut kept the country's benchmark treasury yields elevated.

At the interbank foreign exchange, the rupee opened at its historic low level of 85.94 and touched an intra-day peak of 85.84 before ending the session at 85.87 (provisional) against the greenback, 4 paise higher from its previous close.

On Wednesday, the rupee plunged 17 paise to settle at its all-time low closing level of 85.91 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.05% higher at 108.98. The 10-year US bond yields also remained elevated at 4.67%.

Brent crude, the global oil benchmark, fell 0.03% to USD 76.14 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex declined sharply by 528.28 points, or 0.68%, to settle at 77,620.21 points, while the Nifty dropped 162.45 points, or 0.69%, to 23,526.50 points. The indices have been on the downward track for the past three sessions.

Foreign institutional investors (FIIs) offloaded ₹3,362.18 crore in the capital markets on a net basis on Wednesday, according to exchange data.