Rupee falls 6 paise against US dollar

The dollar gained on expectations that the US Fed may hike interest rates one more time this year.

New Delhi: The rupee depreciated by 6 paise to close at 83.01 against the US dollar on Wednesday, weighed down by a surge in crude oil prices and strong American currency overseas.

However, a positive trend in domestic markets and upbeat macroeconomic data from India cushioned the downside for the local unit, forex traders said.

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At the interbank foreign exchange market, the local unit opened at 82.92 against the US dollar and moved in a range of 82.89 and 83.01.

The rupee finally settled at 83.01 against the US dollar, down 6 paise from its previous close.

On Tuesday, the rupee closed at 82.95 against the US currency.

“The Indian rupee depreciated on Wednesday on strong Dollar and surge in global crude oil prices. However, positive domestic markets and upbeat macroeconomic data from India cushioned the downside,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

The dollar gained on expectations that the US Fed may hike interest rates one more time this year.

“We expect the rupee to trade with a slight negative bias on rising US dollar and surge in crude oil prices. Risk aversion in global markets may also weigh on the rupee.

“However, a positive tone in domestic markets may support the rupee at lower levels. Traders may remain cautious ahead of US CPI data. USD/INR spot price is expected to trade in a range of Rs 82.70 to Rs 83.30,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose marginally by 0.08 per cent to 104.79.

Brent crude futures, the global oil benchmark, advanced 0.58 per cent to USD 92.59 per barrel.

“Indian rupee consolidated in the narrow range ahead of the August US CPI release. It will probably lay the groundwork for a reasonably hawkish FOMC meeting this time next week.

“The Fed will as per the Dot Plots, hold out the threat of one further hike this year. This should keep the dollar reasonably bid well in the near term,” Dilip Parmar, Research Analyst, HDFC Securities, said.

In the near term, spot USD/INR has resistance at 83.15 and support at 82.80. The bias remains bullish for the pair as long as it holds the level of 82.70, Parmar said.

On the domestic equity market front, the 30-share BSE Sensex closed 245.86 points or 0.37 per cent higher at 67,466.99. The broader NSE Nifty advanced 76.80 points or 0.38 per cent to its lifetime closing high of 20,070.00.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 1,631.63 crore, according to exchange data.

India’s industrial production growth rose to a five-month high of 5.7 per cent in July, mainly due to good showing by the manufacturing, mining and power sectors, as per official data released on Tuesday.

Retail inflation declined to 6.83 per cent in August after touching a 15-month high of 7.44 per cent in July, mainly due to softening prices of vegetables, but still remains above the Reserve Bank’s comfort zone.