Rupee snaps 3-day declining streak, rises 28 paise to 81.41 against dollar
Mumbai: Snapping a three-day declining streak, the rupee rebounded 28 paise to close at 81.41 against the US dollar on Wednesday, tracking a weak greenback overseas and a firm trend in domestic equities.
However, rising crude oil prices capped the gains, traders said.
At the interbank foreign exchange market, the local unit opened weak at 81.80 and witnessed an intra-day high of 81.25 and a low of 81.82 against the American currency.
It finally settled at 81.41, registering a rise of 28 paise over its previous close of 81.69.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.45 per cent to 101.93.
Global oil benchmark Brent crude futures rose 1.38 per cent to USD 87.11 per barrel.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, volatility in rupee remained elevated after the Bank of Japan (BoJ) held rates unchanged.
Inflows on the domestic front also led to gains in the rupee.
"The BoJ decided to keep its yield curve tolerance band and ultra-dovish -0.1 per cent interest rate unchanged. The Japanese Yen lost by about over 2 per cent after the release of the policy statement," Somaiya said.
Investors will now focus on retail sales numbers from the US.
"We expect the USD-INR (Spot) to trade sideways and quote in the range of 81.20 and 81.70," Somaiya added.
On the domestic equity market front, the 30-share BSE Sensex advanced 390.02 points or 0.64 per cent to end at 61,045.74, while the broader NSE Nifty rose 112.05 points or 0.62 per cent to 18,165.35.
Foreign Institutional Investors (FIIs) turned net buyers in the capital markets on Tuesday as they purchased shares worth Rs 211.06 crore, according to exchange data.
According to Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas, the Indian rupee appreciated on Wednesday on positive domestic equities and a weak US dollar.
FII inflows also supported the rupee. FIIs turned net buyers on Tuesday for the first time after 17 trading sessions. However, the surge in crude oil prices capped sharp gains.
Dollar declined on rise in risk appetite in global markets. The greenback gained earlier in the day on weak yen after the BoJ maintained an accommodative stance in its monetary policy and kept its yield control curve unchanged.
"We expect the Rupee to trade with a slight negative bias on global economic concerns after IMF Managing Director Gita Gopinath warned of a tough year in 2023 for the global economy," Choudhary said.
Choudhary added that "surge in crude oil prices may also weigh on Rupee. However, weak US Dollar and fresh FII inflows may support Rupee at lower levels. Traders may focus on PPI, retail sales and industrial production data from the US today. USD-INR spot price is expected to trade in a range of Rs 80.50 to Rs 82.20.
