Mumbai, Aug. 9 (PTI): The rupee declined by 9 paise to close at 70.78 against the dollar on Friday as market participants were cautious ahead of a meeting between foreign investors and finance ministry officials regarding the higher tax surcharge.
At the interbank foreign exchange, the rupee witnessed high volatility. After opening on a strong note at 70.54, the local unit touched a high of 70.44 and a low of 70.82 against the American currency during the day.
The domestic unit finally settled down 9 paise at 70.78 against the American currency. The rupee had settled at 70.69 against the US dollar on Thursday.
"FM should seriously reconsider and withdraw unintended super-rich surcharge on FPI's. If they offer any relief on Long term capital gain tax that will certainly go long way in improving sentiments on the street," said V K Sharma, Head-PCG & Capital Market Strategy, HDFC Securities.
On a weekly basis the local unit lost 118 paise.
"It was a volatile week for the rupee. The week began with Yuan depreciating to the lowest since 2008 and led the rupee to fall to INR 70.9850, the lowest in five months. However, a relief rally was seen after RBI cut interest rates by 35 bps and rumours over FM rolling back FPI taxes," Emkay Global Financial Services Currency Research Head Rahul Gupta said.
Forex traders said the trigger for the rupee going forward would be inflation data, any spurt on US-China trade war and geopolitical tensions between India-Pakistan.
"We expect the range to be INR 70.40-71.25," Gupta said.
Foreign institutional investors (FIIs) turned net buyers in the capital markets, putting in INR 203 crore on Friday, provisional data showed.
Forex traders said rising crude oil prices also weighed on the domestic currency.
Brent crude futures, the global oil benchmark, climbed 1.43 per cent to USD 58.20 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.08 per cent to 97.54.
Meanwhile, the 10-year government bond yield was at 6.50 per cent on Friday.
On the domestic market front, the 30-share Sensex settled 254.55 points or 0.68 per cent higher at 37,581.91. The broader NSE Nifty jumped 77.20 points or 0.70 per cent to 11,109.65.
