Mumbai- Extending its winning run for a fifth straight session, the rupee rose further by 22 paise to close at a nearly one-month high of 74.46 against the US currency on Wednesday on the back of easing crude oil prices and foreign fund flows into domestic IPOs.
Besides, a weak American currency in the overseas market also helped the local unit, forex dealers said.
At the interbank forex market, the rupee opened strong at 74.64 against the greenback and later gained strength to settle at 74.46, a level not seen since October 5. The local unit moved in a range of 74.46 to 74.64 in the day trade.
In the five trading sessions to Wednesday, the rupee has strengthened by 57 paise or 0.76 per cent against the US dollar.
Brent crude futures, the global oil benchmark, fell 1.63 per cent to USD 83.34 per barrel in global trade.
Also, India’s services sector activity expanded at the strongest pace in ten-and-a-half years in October, driven by a substantial upturn in business activity amid favourable demand conditions.
Companies indicated that a notable pick-up in new business led to the fastest expansion in output in over a decade, and as a result, more jobs were created, even though business confidence remained subdued due to growing inflationary concerns.
“Indian rupee appreciated for a fifth day in a row amid heavy FPI flows from ongoing IPOs, while central bank remains absent from dollar buying. Better PMI numbers of manufacturing and service activities indicate economic conditions are improving.
“Today is an important day for financial markets as FOMC likely to announce taper and timeline for a rate hike, the outcome of the same will be decided in today’s meeting. The reaction of the same will be felt next Monday as banks will remain closed on Thursday and Friday on account of Diwali Holiday,” Dilip Parmar, Research Analyst, HDFC Securities, said.
As major inflows will dry up next week, the trend of spot USD/INR will be decided from Dollar Index and crude oil prices. Spot USD/INR support has been shifted further lower from 74.50 to 74.20 and resistance to 74.95, Parmar added.
“This week was a short week with USDINR spot witnessing a downtrend on IPO subscriptions. But we can brace for heightened volatility next week after the FOMC, BOE monetary policy decisions, OPEC meeting and US NFP data. Only a hawkish Fed could lead to a bounce in the USDINR spot as tapering announcement seems to be a done deal. So we expect USDINR spot to trade within 74.20-75.20, Emkay Global Financial Services said in a note.
On the domestic equity market front, the BSE Sensex ended 257.14 points or 0.43 per cent lower at 59,771.92, while the broader NSE Nifty declined 59.75 points or 0.33 per cent to 17,829.20.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.03 per cent to 94.04.
Foreign institutional investors were net buyers in the capital market on Tuesday, as they bought shares worth Rs 244.87 crore, according to exchange data. (PTI)