Mumbai, Jun 19 : The rupee pared its initial gains and settled 1 paisa lower at 83.44 (provisional) against the US dollar on Wednesday, mirroring the domestic equity markets that turned choppy towards the end of the session.
Forex traders attributed the rupee’s loss to a strong American currency and rising crude oil prices in the international market. The local unit opened strong at 83.39 at the interbank foreign exchange market, fluctuating between 83.34 and 83.48 during the session, before finally closing at 83.44, down by 1 paisa from the previous day’s close of 83.43.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, noted that the rupee traded on a volatile note, initially showing strength but losing gains as the dollar index found support near 104.80. “The rupee is anticipated to continue trading in a volatile range between 83.25-83.60,” he said.
Meanwhile, the dollar index, which measures the greenback against a basket of six currencies, was slightly higher by 0.01 per cent at 104.88. The dollar index had initially fallen due to lower-than-expected growth in US retail sales but recovered following stronger-than-expected May industrial output numbers. Additionally, US Federal Reserve officials indicated a continued hawkish stance, dampening hopes for an interest rate cut until December.
Brent crude futures, the global oil benchmark, declined by 0.13 per cent to USD 85.22 per barrel.
In the domestic equity markets, the 30-share BSE Sensex inched up 36.45 points, or 0.05 per cent, to 77,337.59 points. The broader NSE Nifty fell 41.90 points, or 0.18 per cent, to 23,516.00 points. Both indices touched fresh peak levels during intra-day trading.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, purchasing shares worth Rs 2,569.40 crore, according to exchange data. Analysts attributed strong FII buying to a firm domestic macroeconomic outlook and a sharp fall in US treasury yields.
Government data released on Tuesday showed net direct tax collections grew 21 per cent to over Rs 4.62 lakh crore so far this fiscal year, driven by higher advance tax payments by corporates, reflecting robust economic activity. Additionally, Fitch Ratings raised India’s growth forecast for the current fiscal to 7.2 per cent from 7 per cent projected in March, citing a recovery in consumer spending and increased investment.
