Rupee edges up 1 paisa to close at 83.12 against US dollar

Mumbai: The rupee edged up 1 paisa to close at 83.12 against the US dollar on Friday amid negative equity markets and rising crude oil prices.

Foreign investors turning net buyers in the capital markets abd dollar selling by PSU lenders helped the local currency close in the green even as rising US bonds yields weighed on riskier assets and emerging market currencies, forex traders said.

At the interbank foreign exchange market, the local unit opened weak at 83.17 and traded between the peak of 83.03 and the lowest level of 83.20 against the greenback.

The local unit finally settled at 83.12, up by 1 paisa over the last close. On Thursday, the rupee had risen 15 paise to close at 83.13 against the US dollar.

Experts attributed the sharp gain in the rupee to RBI’s move as well as some softening in the greenback.

“It is worth highlighting that RBI’s intervention, particularly at 83.25, played a significant role in supporting the rupee. Additionally, the rupee benefited from a period of weakness in the dollar index,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the dollar declined after US Federal Reserve Chair Jerome Powell on Thursday cautioned of a possibility of additional rate hikes, if warranted, on resilient economy and a tight labour market.

However, Powell’s remark that a surge in bond yields helped tighten the financial conditions led to expectations that the central bank may not hike rates for now.

“We expect rupee to trade with a slight negative bias as escalating tensions between Hamas and Israel may continue to deteriorate global risk sentiments. US Dollar may bounce back as safe-haven demand may come into play and crude oil prices may rise further on concerns over supplies,” Chaudhary said.

Rupee finally witnessed some momentum in today’s session after 3 weeks of consolidation, Rinkle Vira, Fundamental Research Analyst, Anand Rathi Shares and Stock Brokers said.

“Traders also eyes on the USDINR overnight cash rate and forward premiums on concerns that a $5 billion dollar/rupee swap could lead to a dollar shortage when it matures on Monday. Hence, banks are opting for liquidating their buying position. India’s public sector banks sold dollars heavily, likely for the central bank, to provide relief to the rupee,” Vira said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.05 per cent to 106.20.

Global oil benchmark Brent crude futures climbed 1.27 per cent to USD 93.55 per barrel.

On the domestic equity market front, Sensex fell 231.62 points or 0.35 per cent to settle at 65,397.62 points. The Nifty declined 82.05 points or 0.42 per cent to 19,542.65 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they bought shares worth Rs 456.21 crore, according to exchange data.