Rupee rises marginally to 88.75 amid range-bound trading; equities support inflows

The rupee rose two paise to 88.75 against the US dollar on Wednesday amid range-bound trading, supported by domestic equities and likely IPO inflows. Analysts expect the currency to stay between 88.50–89.00 as global and domestic factors influence market sentiment.

Mumbai: Rupee witnessed range-bound trading in morning deals on Wednesday and rose two paise to 88.75 against the US dollar, tracking a positive trend in domestic equities and likely IPO-related inflows.

Forex traders said the rupee is trading in a tight range as it remains under pressure due to continued capital outflows and geopolitical developments.

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At the interbank foreign exchange market, the rupee opened at 88.76 against the US dollar, then inched up to 88.75, registering a gain of two paise from its previous close.

On Tuesday, the rupee fell 3 paise to close at 88.77 against the US dollar.

“Today the cues being negative for rupee with dollar index up and Asian currencies down while Equities are showing a slightly negative tone we may see a break out in rupee unless RBI continues to defend the crucial 88.80 level,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Rupee is expected to remain in the range of 88.50 to 89.00 for the day as inflows on account of IPOs remain tepid with subscriptions being completed only on the last day, Bhansali added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.85, higher by 0.28 per cent.

Brent crude, the global oil benchmark, was trading 0.75 per cent higher at USD 65.94 per barrel in futures trading.

Foreign institutional investors purchased equities worth Rs 1,440.66 crore on a net basis on Tuesday, according to exchange data.

On the domestic equity market front, Sensex climbed 254.02 points to 82,180.77 in early trade, while the Nifty was trading up by 70.25 points at 25,178.55.

Meanwhile, Commerce and Industry Minister Piyush Goyal said on Tuesday that India and the US are in continuous dialogue on the proposed bilateral trade agreement, and all possibilities are there to meet the November deadline for concluding the talks.

On the possibility of the next round of trade negotiations in a physical mode, he said that every possibility exists, but with the US government currently in shutdown mode, it remains to be seen how, where, and when the next round of talks can take place.