Mumbai- The rupee recovered most of its initial losses to settle 3 paise down at 74.42 (provisional) against the US dollar on Tuesday, tracking a positive trend in domestic equities and easing crude oil prices.
At the interbank forex market, the local unit opened weak at 74.48 against the greenback and witnessed an intra-day high of 74.38 and a low of 74.57.
It finally ended at 74.42 against the American currency, registering a fall of just 3 paise over its previous close of 74.39.
“Indian rupee recovered opening loss and ended on a flat note after a short-covering bounce in domestic equities. Strength in Asian currencies, lower crude oil price and steady dollar index supported the local unit,” Dilip Parmar, Research Analyst, HDFC Securities, said.
Parmar further added that spot USD/INR is expected to consolidate in a narrow range of 74 to 74.70 amid mixed global and domestic signals.
“There were foreign fund outflows from the secondary market, dollar index heading higher, and at the same time, we could see the central bank selling dollars for month-end dollar demands,” he said.
On the domestic equity market front, the BSE Sensex ended 198.44 points or 0.34 per cent higher at 58,664.33, while the broader NSE Nifty rose 86.80 points or 0.5 per cent to 17,503.35.
Brent crude futures, the global oil benchmark, fell 0.97 per cent to USD 78.93 per barrel.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, declined 0.14 to 96.41.
“Rupee continued to trade in a broad range but fell in the first half following weakness in domestic equities and strength in the dollar against its major crosses,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The greenback rose after the Federal Reserve Chair Jerome Powell was nominated for a second four-year term by President Joe Biden, Somaiyaa said.
Volatility for the greenback in the next couple of sessions could remain elevated ahead of the important Federal Open Market Committee (FOMC) meeting minutes that will be released later this week.
“Today, the focus will be on the preliminary manufacturing PMI number, and the better-than-expected number could extend gains for the dollar. We expect the USD/INR (Spot) to trade sideways and quote in the range of 74.05 and 74.70,” Somaiyaa said.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee recovered from the session lows to end flat against the US Dollar, as a slight recovery in local equities reports of exporters’ dollar sales aided the local unit.
The rupee was also aided by falling crude oil prices.
The dollar index extended gains this Tuesday in European trade and took support from news that Jerome Powell has been reappointed for a second term, reinforcing market expectations that US interest rates will rise in 2022, Iyer said.
Foreign institutional investors were net sellers in the capital market, as they offloaded shares worth Rs 3,438.76 crore on Monday, according to exchange data. (PTI)