The rupee consolidated in a narrow range and settled for the day higher by 1 paisa at 83.72 (provisional) against the U.S. dollar on Wednesday, as the support from positive domestic equities was negated by month-end Dollar demand from importers.
Forex traders said significant foreign fund outflows and overnight surge in crude oil prices weighed on the local unit.
At the interbank foreign exchange market, the domestic currency opened 1 paisa higher than the previous day's close.
It slipped to 83.75 during the day and settled for the day 1 paisa higher at 83.72 (provisional) against U.S. dollar.
On Tuesday, the rupee closed flat at 83.73 against the American currency.
"We expect the rupee to trade with a slight negative bias on month-end dollar demand from importers and oil marketing companies (OMCs). However, a positive tone in the domestic markets and weak US dollar may support the rupee at lower levels," Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said.
Any fresh intervention by the Reserve Bank of India (RBI) may also support the rupee, he said.
"Investors may watch out for the Federal Open Market Committee (FOMC) meeting outcome on Wednesday and Bank of England's monetary policy on Thursday. USDINR spot price is expected to trade in a range of ₹83.50 to ₹84," he said.
In the domestic equity market, the 30-share BSE Sensex rose 285.94 points to hit an all-time high of 81,741.34, while Nifty rallied 93.85 points to a record 24,951.15.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.36% to 104.17.
"The U.S. dollar fell on Wednesday after the Bank of Japan raised interest rates by 15 bps to 0.25% from 0.1%, leading to a sharp surge in the yen. Other Asian currencies, too, appreciated on weakness in the U.S. dollar," Choudhary said.
Brent crude — the global oil benchmark — went up 2.26% to $80.41 per barrel in futures trade.
Foreign institutional investors were net sellers in the capital markets on Tuesday, offloaded shares worth ₹5,598.64 crore, according to exchange data.
Published - July 31, 2024 04:55 pm IST
