Sunday, February 5, 2023

Rupee extends gains, rises 5p to 76.35

Rising for the fourth straight session, the rupee appreciated by 5 paise to close at 76.35 against the US dollar on Thursday after the US Federal Reserve hiked rates by 50 basis points on expected lines but played down prospects of a more aggressive rate action at its next meeting.
At the interbank forex market, the domestic unit opened at 76.17 against the US dollar. It moved in a range of 75.99 to 76.30 during the session.
The rupee finally closed at 76.35, registering a rise of 5 paise over its previous close of 76.40.
The Indian rupee gained against the US dollar after a surprise rate hike by the Reserve Bank of India (RBI) and as US Fed Chairman Jerome Powell pushed back against a steeper 75 basis points rate hike in the coming months, analysts said.
However, unabated foreign fund outflows and firm crude oil prices kept the appreciation bias limited.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.22 per cent higher at 102.81.
On the domestic equity market front, the 30-share BSE Sensex ended 33.20 points or 0.06 per cent higher at 55,702.23, while the broader NSE Nifty inched up 5.05 points or 0.03 per cent to 16,682.65.
Brent crude futures, the global oil benchmark, advanced 0.42 per cent to USD 110.60 per barrel.
Foreign institutional investors remained net sellers in the capital market on Thursday, offloading shares worth Rs 2,074.74 crore, as per stock exchange data.
Sriram Iyer, Senior Research Analyst at Reliance Securities, said the rupee appreciated against the US dollar after Federal Reserve Chairman Powell played down the prospect of a 75-bps rate hike. The rupee also took support from slightly stronger equity markets.
However, after registering brief gains during the day, the local unit retreated as the Asian and emerging market currencies traded weak, while crude prices remained firm.
Demand for the US currency from crude refiners also capped the gains.
According to Jateen Trivedi, Senior Research Analyst at LKP Securities, rupee traded positive in the opening trade on the back of dollar index weakness witnessed overnight after Fed’s statement of no intention to raise rates beyond 0.50 bps at one go, which hinted at stable rise in rates going ahead depending upon macroeconomic data.
“Rupee soon witnessed profit booking as the participants mainly FIIs sold after gap up opening opportunity. Hence, pressure was witnessed on rupee soon after it touched 76.00 zones which has been the resistance point of 20 DMA,” Trivedi said.

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