Mumbai – The rupee snapped its two-day losing streak to settle 10 paise higher at 74.27 against the US dollar on Wednesday, tracking a weak greenback overseas.
At the interbank forex market, the local unit opened at 74.26 against the American currency and witnessed an intra-day high of 74.07 and a low of 74.39.
It finally ended at 74.27 against the US dollar, registering a rise of 10 paise over its previous close. On Tuesday, the rupee had settled at 74.37.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped 0.01 per cent to 91.74.
“The USD-INR spot is following the trend in dollar. Fed’s Powell downplaying the threat of tapering is not weighing on the spot, rather Fed rate hike worries has kept all the dollar bulls active,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
Gupta added that “until the spot tries above 73.75-73.80, it will remain afloat with immediate resistance around 74.50 and then 74.75 zone. While the major supports lies around 73.75-73.50-73.45.”
On the domestic equity market front, the BSE Sensex ended 282.63 points or 0.54 per cent lower at 52,306.08, while the broader NSE Nifty declined 85.80 points or 0.54 per cent to 15,686.95.
Brent crude futures, the global oil benchmark, rose 0.95 per cent to USD 75.52 per barrel.
Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,027.94 crore, as per exchange data.
“The Indian Rupee appreciated against the dollar as US Federal Reserve Chairman Jerome Powell continued to remain dovish and downplayed inflationary concerns and put to rest fears of an early rate hike,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
The rupee had strengthened to an intra-day high of 74.07, but trimmed gains on dollar bids by oil marketing companies, he added.
The dollar index will drive the momentum in the rupee in the coming sessions. The movement of the dollar index will depend on the data in the next couple of session with GDP and PCE Index data on Friday, Iyer said.
According to Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, “rupee opened on a flat note and consolidated in a narrow range despite the Fed Chairman reaffirming that the US central bank intends to encourage a ‘broad and inclusive’ recovery of the job market, and not raise interest rates too quickly based only on the fear of coming inflation.”
Somaiyaa further said “dollar was weighed down after the Fed Chairman’s commentary did not surprise the market. Today, preliminary manufacturing and services PMI number from the US will be important to watch and a better-than-estimated number could strengthen the dollar against its major crosses.”