Rupee pares early losses to close 6 paise up against dollar

PTI Mumbai | Updated on July 23, 2021

The domestic currency appreciated tracking gains in equity market and weak crude oil prices

The rupee pared its early losses to close 6 paise higher at 74.40 against the US dollar on Friday, rising for the third session in a row on the back of weak crude oil prices and gains in the domestic equities.

A stronger dollar in the overseas markets however weighed on the rupee sentiment.

At the interbank forex market, the domestic currency witnessed heavy volatility. The local unit opened weak at 74.55 a dollar and touched a low of 74.58 in morning trade.

The local unit recovered later and touched a high of 74.37 before closing at 74.40 against the American currency, registering a rise of 6 paise over its previous close. On Thursday, the rupee had settled at 74.46.

"Rupee traded positive again as the capital market keeps fund inflow on back of a flurry of IPOs and stable market condition globally. Dollar index basing also helped Rupee take support near 74.55. Going ahead, the rupee can be seen in a range of 74.25-74.60," said Jateen Trivedi, Senior Research Analyst at LKP Securities.

On a weekly basis, the rupee has appreciated 17 paise against the US dollar.

"The Indian rupee clocked third weekly gains following a rebound in risk sentiments and high foreign fund inflows in the primary market. Forex markets ended the week in quiet fashion having stuck in range while we saw equities reclaim all of Monday's sharp losses," said Dilip Parmar, Research Analyst, HDFC Securities.

Going ahead the inflows could continue in domestic market amid few more IPOs while on global front dollar remains relatively strong following reflation and policy divergence.

"All eyes will be on next week's Federal Reserve Policy meeting after the European Central Bank (ECB) held the dovish stance with status quo on interest rate. Spot USDINR expected to trade with in the band of 74 to 74.70," Parmar said.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee appreciated on dollar sale by exporters and corporate dollar inflows.

However, lack of any major trigger kept the local unit in small trading range, Iyer noted.

"The event risk to forex market is next week's Federal Open Market Committee (FOMC) policy. So, the USDINR spot will remain a little directionless until then as with the rising COVID cases in the US, the Fed may communicate a dovish stance," Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services said.

However, any hawkish commentary or hints at tapering the asset purchase programme will surge the USDINR spot above 75 zone. Thus, for next week, we expect the trend to be sideways in between 74-75.25, Gupta added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.10 per cent to 92.91.

On the domestic equity market front, the BSE Sensex ended 138.59 points or 0.26 per cent higher at 52,975.80, while the broader NSE Nifty was up 32 points or 0.2 per cent to 15,856.05.

Global oil benchmark Brent crude futures fell 0.05 per cent to USD 73.75 per barrel.

Published on July 23, 2021

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