Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.05 per cent to 106.28.
Published Date – 09:03 PM, Wed – 27 September 23
Mumbai: The rupee on Wednesday staged a recovery after two days of steep losses to end 6 paise higher at 83.22 against the US dollar on positive cues from domestic equity markets.
However, selling pressure from foreign equity investors amid a strong greenback against major crosses overseas and surging crude oil prices weighed on the local unit and restricted the gain, forex traders said.
At the interbank foreign exchange, the domestic unit opened at 83.23 and traded in a narrow range of 83.18 to 83.24 against the greenback. It finally settled at 83.22, registering a gain of 6 paise from its previous close.
The rupee lost 34 paise in the past two sessions. It closed 15 paise lower at 83.28 against the dollar on Tuesday, a day after registering a decline of 19 paise.
The downward movement of the rupee was attributed to a strengthening dollar amid a record rise in US Treasury yields. Also, the US dollar surged to a ten-month high level after a Federal Reserve policymaker hinted at a prolonged interest rate hike cycle.
“Indian Rupee rose…on reports of the selling of US Dollars by the RBI, which led to a stabilisation in the domestic currency. The rupee depreciated sharply over the past two sessions amid a strong US Dollar and a surge was witnessed in crude oil prices. Weak domestic markets also added to the woes.
“The US Dollar rose to a fresh ten-month high amid hawkish comments from US Federal Reserve officials. US 10-year treasury yields also rose to the highest levels since 2007. However, downbeat economic data from the US capped sharp gains,” Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas, said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.05 per cent to 106.28.
Brent crude futures, the global oil benchmark, were trading 0.87 per cent higher at USD 94.78 per barrel.
“The dollar index has been on a strong rally, reaching as high as 106, and crude oil prices have also been gaining strength… These factors are putting pressure on the rupee, making it difficult for it to rise significantly.
“One source of support for the rupee has been the recovery in capital markets, which has helped boost sentiment. However, the rupee’s movement in the near term will likely be heavily influenced by developments in the dollar and crude oil prices,” Jateen Trivedi, VP Research Analyst at LKP Securities said.
On the domestic equity market front, the BSE Sensex closed 173.22 points or 0.26 per cent higher at 66,118.69. The broader NSE Nifty advanced 51.75 points or 0.26 per cent to settle at 19,716.45.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 354.35 crore, according to exchange data.
“We expect the rupee to trade with a slight negative bias on risk aversion in global markets and a strong US Dollar. Further, the hawkish tone of US Federal Reserve officials and the surge in crude oil prices may also weigh on the rupee. However, any intervention by the RBI may support the rupee at lower levels,” Choudhary said.
