Mumbai

The rupee erased its early gains and ended lower by 11 paise at 91.79 (provisional) against the US dollar on Wednesday, weighed down by persistent foreign fund outflows that offset support from a weaker dollar index.

Forex market participants said the domestic currency started the session on a positive note as the dollar index eased and optimism around a trade agreement with Europe lent some confidence. However, selling pressure from overseas investors and lingering geopolitical concerns capped the rupee’s recovery.

At the interbank foreign exchange, the rupee opened at 91.60 and strengthened further to touch an intraday high of 91.50 before reversing course. It later slipped to a low of 91.83 and finally settled at 91.79, marking a decline of 11 paise from the previous close.

In the previous session on Tuesday, the rupee had staged a sharp rebound from record low levels, gaining 22 paise to finish at 91.68 against the US dollar.

Market sentiment earlier in the day was supported by news of a breakthrough in India–European Union trade negotiations. India and the EU on Tuesday announced the conclusion of talks on a free trade agreement, which is expected to provide duty-free access to several Indian sectors such as apparel, chemicals and footwear in the 27-nation bloc. In return, European products including automobiles and wines will enter the Indian market at concessional tariffs.

The agreement, often described as a landmark pact, is expected to create a combined market of nearly two billion people.

Meanwhile, the dollar index, which tracks the greenback’s strength against six major currencies, was trading 0.07 per cent lower at 96.14. Global oil prices also eased, with Brent crude futures down 0.43 per cent at USD 67.28 per barrel.

In the domestic equity markets, benchmark indices ended sharply higher. The Sensex rose 487.20 points to close at 82,344.68, while the Nifty advanced 167.35 points to 25,342.75.

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Despite the equity rally, foreign institutional investors remained net sellers, offloading shares worth Rs 3,068.49 crore on Tuesday, according to exchange data.