Mumbai, Sep 17 (PTI) The rupee staged a spirited recovery after slipping below the 96 level intraday and settled higher by 2 paise at 95.89 against the US dollar on Thursday on heavy dollar selling by banks, snapping its seven-day falling streak.
The local currency breached the 96 level to hit a low of 96.10 to a dollar in day trade after a 25 basis point rate hike by the US Federal Reserve, sustained foreign fund outflows from stock markets and high crude oil rates.
Forex traders said that dollar selling by banks on behalf of the RBI helped the local unit recoup losses and hit a high of 95.78 to a dollar. A slight correction in the dollar index and crude oil prices also supported investor sentiment despite global geopolitical volatility, they added.
At the interbank foreign exchange market, the rupee opened higher at 95.88 but soon reversed gains and hit the intraday low of 96.10, breaching the 96 level for the first time since July 24.
The unit recovered during the session and touched the high of 95.78 before settling at 95.89 against the US dollar, up 2 paise from the previous closing level, breaking the seven-day falling trend.
“The Indian rupee experienced a highly volatile trading session on Thursday, initially buckling under a hawkish Fed onslaught and weaker Asian currency sentiment. However, those early losses proved fleeting as aggressive central bank intervention swooped in with heavy-handed dollar defence, pulling the local unit off the canvas to secure marginal gains,” Dilip Parmar – Senior Research Analyst, HDFC Securities.
Parmar further noted that “turning to the technical outlook, the spot USD/INR pair remains in an overall upward trend following its recent surge, though we anticipate a period of short-term consolidation with key support around 95.45 and resistance capped at 96.30.” On Wednesday, the local unit ended 3 paise lower at 95.91 against the American currency, extending its downward trend for the seventh session in a row. In the preceding six sessions, the rupee has lost 148 paise, or more than 1.4 per cent, since the closing level of 94.43 against the greenback recorded on September 4.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05 per cent lower at 99.92.
Brent crude, the global oil benchmark, was trading 1.29 per cent lower at USD 104.47 per barrel in futures trade.
Dealers said global trade uncertainties after the House of Representatives cleared a law authorising President Donald Trump to impose up to a 100 per cent tariff on India and other countries importing Russian oil weighed on the local unit.
The domestic unit was also weighed down after the US Federal Reserve hiked interest rates for the first time in three years amid rising inflation, they said.
In domestic equities, Sensex fell 21.86 points, or 0.03 per cent, to settle at 74,314.59, while the Nifty ended with a gain of 53.00 points, or 0.23 per cent, at 23,270.60.
Foreign institutional investors (FIIs) offloaded equities worth Rs 3,208.76 crore on a net basis on Thursday, according to exchange data. PTI HVA VHI MR
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