Mumbai: The rupee depreciated 21 paise to close at 82.80 against the US dollar on Wednesday, tracking a muted trend in domestic equities ahead of the release of the US Fed’s policy statement.
At the interbank foreign exchange market, the local unit opened strong at 82.64 and witnessed a high of 82.62 and a low of 82.81.
It finally settled at 82.80 against the American currency, registering a fall of 21 paise over its last close of 82.59.
“Rupee consolidated in a narrow range ahead of the important events that are lined up today and tomorrow,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The focus will be on the Federal Open Market Committee (FOMC) policy statement on Wednesday, which is likely to trigger volatility for the greenback.
In remarks that come hours ahead of a review of monetary policy announcements in the US, RBI Governor Shaktikanta Das said the US Fed Reserve cannot tighten endlessly and capital flows will eventually resume.
The RBI’s rate-setting panel will be meeting on Thursday to discuss and formulate a response to the government for a failure to meet the inflation target.
Its reply will focus on the reasons that led to inflation staying above 6 per cent for nine consecutive months when it sees inflation coming back into the 2-6 per cent band and the measures that will be taken, Das said.
The Pound and Euro too are consolidating in a range ahead of the Bank of England (BoE) policy statement. The BoE is also expected to raise rates and maintain a hawkish stance.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.28 per cent to 111.17.
“The Indian rupee settled lower as traders positioned for the upcoming Federal Reserve meeting outcome, while the dollar index quoted lower against major currencies,” said Dilip Parmar, Research Analyst, HDFC Securities.
The market is well positioned for the fourth consecutive 75 bps hike and also placed for another jumbo hike or a half-point move in December, Parmar said, adding that traders will be focused on what the Fed has to say about its intentions for December.
“Spot USD/INR is still in a bullish trend but facing stiff resistance around 83 and crossing the same will pave way for new life high while on the downside 82.10 remains strong support,” Parmar noted.
Global oil benchmark Brent crude futures slipped 0.26 per cent to USD 94.40 per barrel.
On the domestic equity market front, the 30-share BSE Sensex fell 215.26 points or 0.35 per cent to end at 60,906.09, while the broader NSE Nifty advanced 62.55 points or 0.34 per cent to 18,082.85.
Foreign Institutional Investors (FIIs) were net buyers on Wednesday as they bought shares worth Rs 1,436.30 crore, as per exchange data.
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