Rupee rises 7 paise, settles at 83.18 against US dollar

However, unabated withdrawal of funds by foreign institutional investors weighed on the domestic currency, forex analysts said

Mumbai: The rupee continued its gaining momentum for the second consecutive day and appreciated 7 paise to settle at 83.18 against the US dollar on Wednesday amid robust buying in domestic equities and a weak American currency overseas.

However, unabated withdrawal of funds by foreign institutional investors weighed on the domestic currency, forex analysts said.

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At the interbank foreign exchange, the rupee opened strong at 83.20 and traded between the intra-day peak of 83.15 and the lowest level of 83.24 against the greenback. The local unit finally settled at 83.18, registering a gain of 7 paise from its previous close.

On Tuesday, the rupee settled 3 paise higher at 83.25 against the US dollar.

According to Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, the rupee is expected to trade with a slight positive bias on the rise in risk appetite in global markets and softness in the US dollar amid dovish comments by US Federal Reserve officials. However, geopolitical uncertainty due to the ongoing Israel-Hamas conflict may cap a sharp upside.

“Any upside reversal in crude oil prices and FII outflows may also weigh on the rupee at higher levels. Traders may remain cautious ahead of PPI data and FOMC minutes from the US today and inflation data from India and the US later this week. USD-INR spot price is expected to trade in a range of Rs 82.80 to Rs 83.50,” Choudhary said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent lower at 105.73.

Brent crude futures, the global oil benchmark, declined 0.65 per cent to USD 87.08 per barrel.

On the domestic equity market front, the BSE Sensex closed 393.69 points or 0.60 per cent higher at 66,473.05. The broader NSE Nifty climbed 121.50 points or 0.62 per cent to 19,811.35.

Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 421.77 crore, as per exchange data.

The release of the US Federal Reserve’s meeting minutes is expected to provide insights into the central bank’s view on the interest rate cycle as well as its outlook for the next meeting and stance on monetary policy, Jateen Trivedi, VP Research Analyst at LKP Securities, said.

“Tomorrow’s release of the CPI in the US will give a strong indication of the dollar’s movement, which will have an impact on the rupee’s performance against the dollar. The rupee’s trading range is expected to remain between 83.10 and 83.40,” Trivedi said.