Snapping its two-day losing streak, the rupee gained 10 paise against the US dollar on Wednesday, June 23, to settle at 74.27, tracking a weaker American currency. At the interbank foreign exchange market, the domestic unit opened at 74.26 against the dollar and witnessed an intra-day high of 74.07. It witnessed a low of 74.39. In an early trade session, the local unit gained 11 paise to 74.26 against the greenback. The rupee ended at 74.27 against the dollar, registering a rise of 10 paise over its previous close.
On Tuesday, June 22, the domestic unit settled at 74.37 against the American currency. The dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped 0.01 per cent to 91.74.
“The USDINR spot is following the trend in dollar. Fed Powell downplaying the threat of tapering is not weighing on the spot, rather Fed rate hike worries has kept all the dollar bulls active. So until the spot tries above 73.75-73.80, it will remain afloat with immediate resistance around 74.50 and then 74.75 zone,” said Mr. Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
”The Fed governor- Powell in his two-day testimony renewed the forecast on inflation by commenting that price pressure is expected to drop back toward our longer-run goal as the supply effect will be transitory in nature. This led the dollar index to retrace back yesterday below 91.80, risk-on sentiment helped equities to move higher and made other currencies cool off their losses,” said Mr Amit Pabari, MD, CR Forex.
The recent divergence between equity and rupee will not last long and we will see convergence again….The dollar index and emerging market peer currencies will drive the momentum in the rupee. Thus we are expecting that the USDINR pair will trade in the range of 73.50-74.50 over the short term,” he added.
On the domestic equity market front, the BSE Sensex ended 282.63 points or 0.54 per cent lower at 52,306.08, while the broader NSE Nifty fell 85.80 points or 0.54 per cent to 15,686.95.
“Nifty failed to maintain its upward thrust; Along with this the broader market health has also weakened. The larger setup suggests a possible short term correction up-to 15300 odd levels in the next few weeks. We suggest reducing long aggression and buying on aggressive corrections,” said Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities.
According to exchange data, the foreign institutional investors were net sellers in the capital market on June 22 as they offloaded shares worth Rs 1,027.94 crore. Brent crude futures, the global oil benchmark, rose 0.95 per cent to $ 75.52 per barrel.