Mumbai, Jun 18 (PTI) The rupee pared its initial losses and settled for the day 10 paise higher at 94.40 against the US dollar, as the US and Iran signed the peace agreement, boosting global market sentiments.
Forex traders said market sentiments were buoyant after the United States and Iran electronically signed a memorandum of understanding aimed at ending hostilities and creating a framework for negotiations on Iran’s nuclear programme. Negotiators are expected to meet in Geneva on Friday.
Meanwhile, positive domestic equities supported investor sentiments further.
However, the broad strength of the American currency in the overseas market, on the US Federal Reserve’s hawkish stance, capped the upside for the USD/INR pair.
The US Federal Reserve held interest rates steady as widely anticipated but implied that at least one quarter-point rate hike would come later this year.
At the interbank foreign exchange, the rupee opened at 94.66 against the US dollar and traded in the range of 94.18-94.71. Eventually, it settled at 94.40, up 10 paise from its previous close.
On Wednesday, the rupee appreciated 10 paise to close at 94.50 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 100.59, higher by 0.51 per cent.
Brent crude, the global oil benchmark, was trading down 2.33 per cent at USD 77.70 per barrel in futures trade.
Forex traders said that with oil prices moving in India’s favour and foreign inflows remaining supportive, the near-term outlook for the rupee remains positive.
“We expect the rupee to trade with a positive bias on a rise in risk appetite in global markets amid the signing of the deal between the US and Iran. Falling oil prices also supported the rupee.
“However, US President Donald Trump warned of fresh attacks if a full deal is not reached. Any recovery in the US dollar and the US treasury yields amid a hawkish Fed may also weigh on the dollar at higher levels,” said Anuj Choudhary, research analyst at Mirae Asset ShareKhan.
Dilip Parmar, Research Analyst, HDFC Securities, said the rupee remains the lead performer among Asian peers, energised by a resurgence of capital inflows and cooling oil prices.
“With risk-on sentiment back in the driver’s seat, we expect the local rupee to march toward 94 on the back of dollar inflows. Technically, USD-INR spot is boxed between a crucial resistance at 94.90 and firm support at 94.10,” Parmar said.
On the domestic equity market front, Sensex advanced 254.36 points to settle at 77,409.98, while the Nifty climbed 82.30 points to 24,168.
Foreign institutional investors offloaded equities worth Rs 1,025.20 crore on a net basis on Thursday, according to exchange data.
According to the government data released on Thursday, net income tax collection grew 14.64 per cent to over Rs 5.21 lakh crore between April 1 and June 17. The gross direct tax collection increased 12.46 per cent to over Rs 6.10 lakh crore.
Meanwhile, Prime Minister Narendra Modi and US President Donald Trump directed their officials to work towards a balanced, mutually beneficial and commercially meaningful trade agreement at the earliest.
The Ministry of External Affairs (MEA) said this on Thursday, a day after the two leaders held wide-ranging talks for the first time in 16 months on the margins of the G7 Summit in an attempt to rebuild the strained bilateral ties. PTI DRR HVA
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