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| Photo Credit: C. Venkatachalapathy
The rupee fell 13 paise to settle at 82.01 (provisional) against the U.S. dollar on July 26 due to an elevated crude prices in international markets and month-end dollar demand from importers.
Positive cues from the domestic equity market and inflow of foreign funds provided support to the rupee, even as investors traded cautiously ahead of U.S. Federal Reserve’s interest rate decision, Forex traders said.
According to Anuj Choudhary, Research Analyst at Sharekhan by BNP Pariba, the rupee declined “as traders adjusted their positions ahead of the FOMC decision tonight and month-end dollar demand from importers”.
“Reports of RBI intervention also weighed on the rupee. However, the surge in domestic markets and a soft US dollar capped sharp gains,” Choudhary said.
At the interbank foreign exchange, the domestic unit opened at 81.89 against the dollar and finally ended the day at 82.01 (provisional), registering a fall of 13 paise from its previous close.
During the session, the local unit touched a peak of 81.87 and hit the lowest level of 82.03.
On Tuesday, the rupee had settled at 81.88 against the dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.22% to 101.13.
Brent crude futures, the global oil benchmark, declined by 0.82% to $82.95 per barrel.
On the domestic equity market front, the 30-share BSE Sensex closed 351.49 points or 0.53% higher at 66,707.20. The broader NSE Nifty climbed 97.70 points or 0.50% to close at 19,778.30.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they bought shares worth ₹1,088.76 crore, according to exchange data.
“We expect the rupee to trade with a slight negative bias on risk aversion in global markets on expectations of a rate hike by the US Federal Reserve.
“Elevated crude oil prices and month-end dollar demand from importers may also weigh on the rupee. However, FII inflows may support the rupee at lower levels. We expect the USD/INR spot to trade in the range of 81.60 to 82.50 in the near term,” Choudhary added.
The International Monetary Fund (IMF) on Tuesday upgraded India’s growth forecast for FY24 to 6.1% from 5.9% in its previous forecast.
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