Continuing its winning streak for the fourth straight session, the rupee inched two paise higher against the US dollar on Thursday, August 5, to settle at 74.17 (provisional) ahead of the Reserve Bank of India (RBI) policy decision on August 6. At the interbank foreign exchange market, the local unit opened at 74.15 and registered an intra-day low of 74.28. In an early trade session, the domestic unit inched four paise higher to 74.15 against the greenback. The rupee closed at 74.17 against the dollar, higher by two paise over its previous close.
On Wednesday, August 4, the local unit settled at 74.19 against the American currency. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.05 per cent to 92.22. According to forex traders, the price action remained subdued as the investors awaited the RBI’s monetary policy statement for further cues.
What analysts say:
Mr Amit Pabari, MD, CR Forex:
”Globally, the dollar index rebounded to 92.30 making a dramatic reversal after testing a key support level near 91.80 in an earlier session amid hawkish comments from US Federal Reserve Vice Chair Richard Clarida, who suggested the central bank could start cutting back on bond purchases later in the year.
Overall, expectations are high that the Fed will upgrade growth projections and turn hawkish given by the surprising pace of economic recovery in the US. This could turn the dollar stronger in the upcoming time.
Investors are remaining cautious and looking for cues from the Reserve Bank of India’s monetary policy meeting to gauge its stance to get more clarity on the rupee’s further course of action. Till then, momentum in the rupee could be trapped within the narrow range of 74.10-74.50 levels.”
Kshitij Purohit, Lead International & Commodities at CapitalVia Global Research Limited:
”USD/INR is trading around 74.16, down 0.08 intraday, to reclaim a multi-day bottom in the early hours of Wednesday. As a result, the Indian rupee (INR)/US dollar pair has fallen for the third day in a row, owing to broad US dollar weakness.
On the domestic front, USD/INR August opened on a negative note and was moving in a marginally sideways trend since morning. It gave a breakout from the “Falling Channel” candlestick chart pattern which turned out to be a fake one as the currency pair immediately recovered and started moving sideways.
Moving averages are intertwined in each other, thus, not giving any idea about the direction in upcoming sessions. For upcoming sessions, today’s range may act as a support and resistance.”
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities:
“Even though the spot closed flat near 74.17 but selling continued in USDINR futures. With equity markets in an uptrend, US Dollar Index weaker, and oil prices falling, Rupee is seeing strength against the US Dollar. Bias continues to be downward in USDINR. We expect a range of 73.70-74.40 range over the near term.”
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 123.07 points or 0.23 per cent higher at 54,492.84, while the broader NSE Nifty climbed 35.80 points or 0.22 per cent to 16,294.60.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:
“Benchmark indices maintained their strong momentum, as both Nifty/Sensex registered fresh all-time highs of 16349.45/ 54717.24, respectively. After a sharp sideways movement intra-day, indices trimmed some gains in the last hour of trade.
Technically, the larger texture of the market is positive and is likely to continue in the medium term. However, some profit booking at higher levels is not ruled out near 16350-16375 resistance levels. Trade setup suggests that the ideal strategy would be to add long positions near crucial supports.”
According to exchange data, the foreign institutional investors were net buyers in the capital market on August 4 as they purchased shares worth Rs 2,828.57 crore. Brent crude futures, the global oil benchmark, rose 0.74 per cent to $ 70.90 per barrel.