Rupee slides by 8 paise to 72.97 against dollar

Mumbai: Falling for the second day in a row, the rupee closed lower by 8 paise at 72.97 against the US currency on Wednesday amid a lacklustre trend in domestic equities.

At the interbank foreign exchange market, the rupee opened on a negative note at 72.90 per dollar as against its previous close of 72.89. It hovered in the range of 72.88 to 73.02 per dollar during the day before ending at 72.97. The domestic currency has lost 17 paise in the two trading sessions to Wednesday.

The local unit traded in a narrow range amid lack of any major data on Wednesday in the domestic and the international markets, traders said.

“Dollar demand from corporates and weak equities kept appreciation bias limited,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The US Dollar is trading marginally lower in lacklustre trade this Wednesday afternoon trade as traders looked to upcoming US inflation data and a European Central Bank (ECB) meeting to gauge the pace of global recovery and policymakers’ thinking about paring back stimulus, Iyer noted.

“Rupee continued to consolidate in a narrow range and lack of cues on the domestic front kept the volatility low for the currency. On the domestic front, the focus will be on the industrial production number that will be released later this week,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“Slower growth in industrial production could weigh on the rupee. Euro is trading with a positive bias ahead of the ECB policy statement that is scheduled for release on Thursday.” The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.09 per cent to 89.99.

“The USDINR spot is hovering around 73 zone, whether it will bounce or not depends on US CPI. The forex traders await some guidance from Thursday’s CPI data and ECB policy,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.

Gupta further noted that “an upbeat CPI data won’t provide an excuse for the Fed to defer the tapering debate a little longer but all will be revealed at the June 16th FOMC meeting. Until then in USDINR spot, 73.25-73.30 is a crucial resistance, a consistent above that can push prices towards 73.60-73.75 zone while 72.75-72.50 will act as a crucial support.”

On the domestic equity market front, the BSE Sensex ended 333.93 points, or 0.64 per cent lower at 51,941.64, while the broader NSE Nifty fell 104.75 points or 0.67 per cent to close at 15,635.35.

Brent crude futures, the global oil benchmark, rose 0.35 per cent to USD 72.47 per barrel.

Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 1,422.71 crore, as per exchange data.