Traders said investors are awaiting key inflation data releases from the U.S. and India for further cues.
| Photo Credit: NAGARA GOPAL
Rising for the third straight session, the rupee gained 19 paise to 82.22 (provisional) against the U.S. dollar on Wednesday, as weakness in the American currency overseas and steady foreign fund inflows boosted investor sentiment.
However, a surge in crude oil prices capped the gains in the local unit, forex traders said.
At the interbank foreign exchange market, the local unit opened at 82.29 against the U.S. dollar and settled 19 paise lower at 82.22 (provisional) against the previous close.
During the day, the domestic unit witnessed an intra-day high of 82.23 and a low of 82.32.
This is the third straight day of rise for the rupee, during which it has gained 44 paise.
On Tuesday, the rupee had closed at 82.41 against the dollar.
The U.S. dollar declined on expectations that a slowdown in inflation may lead to a slower pace of rate hike by the U.S. Federal Reserve, said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
Though the U.S. central bank may hike rates in July, a further rate rise in September may be data dependent, Mr. Choudhary said.
“We expect the rupee to trade with a slight positive bias, weakness in the U.S. dollar and improved global risk sentiments. Sustained foreign inflows may also support the rupee while a rise in crude oil prices may cap a sharp upside,” Mr. Choudhary said.
Market participants may remain cautious ahead of India’s inflation and IIP data and U.S. inflation data. “We expect USD/INR spot to trade in between 81.80 to 82.80 in the near-term,” Mr. Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.26% to 101.47.
Brent crude futures, the global oil benchmark, advanced 0.38% to $79.70 per barrel.
Traders said investors are awaiting key inflation data releases from the U.S. and India for further cues.
On the domestic equity market front, the 30-share BSE Sensex closed 223.94 points or 0.34% lower at 65,393.90. The broader NSE Nifty declined 55.10 points or 0.28% to 19,384.30.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth ₹1,197.38 crore, according to exchange data.
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