Rupee Snaps 4-Day Winning Streak, Declines To 73.08 Against Dollar: Here’s Why


Rupee Vs Dollar Today: The rupee settled at 73.08 against the dollar

The rupee snapped its four-day winning streak and dropped eight paise against the US dollar on Wednesday, September 1, to settle at 73.08 amid muted domestic equities and a stronger American currency in the overseas market – both of which weighed on the market sentiment. At the interbank foreign exchange market, the domestic unit opened at 73.05 against the dollar and registered an intra-day high of 72.92. It witnessed a low of 73.50.

In an early trade session, the local unit declined five paise to 73.05 against the greenback. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.03 per cent higher at 92.65.

What analysts say:

Mr Amit Pabari, MD, CR Forex:

”Globally, the dollar index remains steady around 92.75 levels with market participants eyeing the key focus on Friday’s US jobs report for clues on when the Fed could consider starting taper. Meanwhile on the data front, U.S. consumer confidence slumping to a six-month low and slowdown in manufacturing activity in various regions has dampened the economic outlook and kept the dollar under pressure. 

Data showed the Indian economy expanded at a record 20.1 per cent YoY in Q2 2021, slightly higher than market forecasts of 20 per cent while India’s infrastructure output growth stood at 9.4 per cent YoY despite the second wave of covid-19 infections and localized lockdowns supporting rupee.

Given by absence of any intervention by the RBI up to 73 levels, technically, the next support for the pair is near 72.80 while 73.50 remains a strong resistance, keeping the pair consolidated between 72.80-73.50 levels for now.”

 Kshitij Purohit, Lead International & Commodities at CapitalVia Global Research Limited:

”Despite new all-time highs on Wall Street, the USD/INR opened the day at 73.25, essentially unchanged from the previous day’s closing, due to weakening in Asian shares as negative Chinese data weighed. Following a significant drop in the currency pair over the last two days, we predict the currency pair to trade in a range of 73.00 to 74.00.

The rupee strengthened further on Monday as a result of Fed Chair Janet Yellen’s refusal to announce a timetable for raising interest rates at the Jackson Hole symposium on Friday. The market is now looking for further signs of economic recovery and the withdrawal of monetary support in the US non-farm payrolls data, which is coming this Friday.

The Fed is sounding dovish on rates and plans to decrease bond purchases in a staggered way by year’s end. The yield on US T-bonds has dropped to 1.2780 percent, while the dollar index has dropped to 92.50, causing developing market currencies to rally. USD/INR Sep opened on a negative note and breached the support zone of 73.70-73.65 in the first of the session.”

Domestic Equity Markets Today:

On the domestic equity market front, the BSE Sensex ended 214.18 points or 0.37 per cent lower at 57,338.21, while the broader NSE Nifty dropped 55.95 points or 0.33 per cent to 17,076.25. Tata Steel, HDFC, Infosys, Tata Consultancy Services, Mahindra & Mahindra, and HDFC Bank were among the top drags on the Sensex.

Mr. Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Limited:

”Equity markets opened positive, but after touching yet another fresh lifetime high, indices witnessed minor profit booking and ended the session in red. Both Nifty/Sensex closed with loss of 56/214 points – down -0.3 per cent/-0.4 per cent at 17,076/57,338. Broader market, however outperformed and closed positively with Nifty midcap 100/Nifty smallcap 100 up of 0.7 per cent/0.3 per cent respectively.

Globally cues were mixed as fresh signs of weakness in Asian economies post more disappointing data from China, got offset by hopes for more stimulus.

On domestic front, Nifty opened positive on the back of robust economic data but later witnessed some profit booking after the recent rally over past few sessions. However, sentiments continue to be bullish economic data points show gradual recovery.”

According to exchange data, the foreign institutional investors were net buyers in the capital market on August 31 as they purchased shares worth Rs 3,881.16 crore. Brent crude futures, the global oil benchmark, rose 0.43 per cent to $71.94 per barrel.

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