Rupee gains 3 paise to close at 95.25 against US dollar

Mumbai: The rupee consolidated in a narrow range and rose 3 paise to close at 95.25 (provisional) against the US dollar on Thursday, supported by positive domestic markets and softening crude oil prices.

Forex traders said the rupee had fallen to a two-week low amid a strong dollar and a slightly hawkish US Federal Reserve. However, positive domestic markets and softer crude oil prices cushioned the downside.

In the interbank foreign exchange market, the rupee opened at 95.20 against the dollar, then lost ground to touch an intraday low of 95.38 before finally settling at 95.25 (provisional), registering a gain of 3 paise over its previous close.

On Wednesday, the rupee depreciated 21 paise to close at 95.28 against the US dollar.

“We expect the rupee to trade with a slight negative bias amid a hawkish Fed and a strong dollar. Expectations of a rate hike by the Fed in December may further strengthen the dollar,” said Anuj Choudhary, research analyst at Mirae Asset Sharekhan.

However, softer crude oil prices and optimism over diplomatic talks between the US and Iran may also support the rupee at lower levels.

“Traders may take cues from GDP and core PCE price index data from the US. Investors will also watch out for the ECB’s monetary policy. The USD-INR spot price is expected to trade in a range of 94.50 to 95.50,” Choudhary added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.07 per cent higher at 102.26.

Brent crude, the global oil benchmark, was trading 1.03 per cent lower at USD 114.13 per barrel in futures trade.

The US Federal Reserve kept interest rates unchanged at 3.75–4.00 per cent, as widely expected, but the market reaction turned mildly negative for the dollar, forex traders said.

The Fed’s pause has left markets highly sensitive to incoming data. Stronger inflation could reinforce expectations of a rate hike in December, while softer readings could offer relief to bullion and emerging-market currencies.

On the domestic equity market front, the Sensex jumped 905.01 points to settle at 74,151.04, while the Nifty surged 237.90 points to 22,936.75.

Foreign Institutional Investors (FIIs) bought equities worth Rs 871.83 crore on a net basis on Wednesday, according to exchange data.