Mumbai, Apr 28 (PTI) The rupee pared all its initial gains to settle lower by 3 paise at 81.82 against the US currency on Friday amid a strong greenback overseas.
However, the strong sentiment in the domestic equities market and fresh foreign fund inflows restricted the depreciating bias in the rupee, forex traders said.
At the interbank foreign exchange, the domestic unit opened at 81.77 against the dollar and finally closed at 81.82, down 3 paise from its previous close.
During the day, the rupee witnessed a high of 81.72 and a low of 81.85 against the greenback.
On Thursday, the rupee closed at 81.79 against the US currency.
The rupee depreciated on a strong US Dollar and a recovery in crude oil prices. However, positive domestic equities and FII inflows cushioned the downside, Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas said.
The US dollar strengthened on strong earnings by IT companies and as US inflation data released on Thursday were elevated, raising expectations of a hawkish Federal Open Market Committee (FOMC).
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.51 per cent to 102.02.
“We expect the rupee to trade with a slight positive bias on the rise in risk appetite in global markets and fresh inflows from foreign investors. However, a strong US Dollar may prevent a sharp upside in the rupee,” Choudhary said.
Traders may remain cautious ahead of India’s fiscal deficit and core PCE deflator from the US, which is the preferred gauge of inflation used by the US Federal Reserve, Choudhary said, adding that “We expect USD/INR spot to trade in between 81.30 to 82.20 in the near-term”.
The Indian rupee posted its second monthly gain supported by dollar inflows, improved economic progress, and a weaker US dollar, Dilip Parmar, Research Analyst at HDFC Securities, said.
“In April, the rupee gained nearly 0.4 per cent, after touching a three-month high of 81.61 earlier this week. Foreign institutions have purchased approximately USD 650 million in stocks and USD 27 million in debt instruments,” Parmar added.
Brent crude futures, the global oil benchmark, advanced 0.45 per cent to USD 78.72 per barrel.
On the domestic equity market front, the 30-share BSE Sensex closed 463.06 points or 0.76 per cent higher at 61,112.44 points. The broader NSE Nifty advanced 149.95 points or 0.84 per cent to 18,065.00 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Thursday as they purchased shares worth Rs 3,304.32 crore, according to exchange data.
For the week, the rupee gained support from muted Asian peers and corporate inflows, but the gains were limited by possible profit-taking by dollar short positions and dollar buying by public sector banks, according to Sriram Iyer, Senior Research Analyst at Reliance Securities.
The dollar index rose on the Friday afternoon session and capped gains for the currency.
Indian financial markets are shut on Monday on account of the Maharashtra Day holiday. PTI DRR BAL BAL
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