Mumbai, Feb 14 (PTI) The rupee appreciated 6 paise to close at 83.02 against the US dollar on Wednesday, tracking positive domestic equities.
A strengthening American currency overseas and elevated crude oil prices weighed on the local unit and restricted a sharp uptick, forex traders said.
At the interbank foreign exchange, the local unit opened at 83.11 against the greenback. It hit an intra-day high of 83.02 and a low of 83.12.
It finally settled at 83.02 against the dollar, higher by 6 paise from its previous close of 83.08.
“We expect the rupee to trade with a slight negative bias on strong US dollar and risk aversion in global markets. Rising crude oil prices may also put pressure on the rupee,” said Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas.
Choudhary added that any bounce back in domestic markets may support the rupee at lower levels.
“Traders may remain cautious ahead of India’s trade balance and US retail sales data. USD-INR spot price is expected to trade in a range of Rs 82.80- 83.40,” Choudhary said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.04 per cent lower at 104.92.
“US Dollar bounced back on hotter-than-expected inflation. US CPI rose 3.1 per cent y-o-y in January 2024 vs the forecast of 2.9 per cent. Core CPI rose 3.9 per cent y-o-y vs the forecast of 3.7 per cent. This led to a decline in expectations of a rate cut by the Federal Reserve in March and May 2024,” Choudhary said.
Brent crude futures, the global oil benchmark, rose 0.16 per cent to USD 82.90 per barrel.
On the domestic macroeconomic front, the wholesale price index (WPI)–based inflation eased to a three-month low of 0.27 per cent in January, mainly due to moderation of food prices, including vegetables.
On the domestic equity market front, the Sensex advanced 267.64 points, or 0.37 per cent, to 71,822.83. The Nifty rose 96.80 points, or 0.45 per cent, to 21,840.05.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they sold shares worth Rs 3,929.60 crore, according to exchange data.
“The decline in inflation is contributing to an increase in the real yields on rupee-denominated debt, as well as widening the real yield gap compared to other major currencies.
“This trend could favour the rupee, particularly against European currencies and Asian counterparts like the Yen and the Yuan,” said Anindya Banerjee, Head – Currency and Derivatives Research, Kotak Securities. PTI DRR DRR BAL BAL BAL
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