Mumbai: The rupee traded in a narrow range and settled 5 paise lower at 82.38 against the US dollar on Thursday, tracking a muted trend in domestic equities amid weak domestic macroeconomic data.
Besides, risk aversion sentiment among investors weighed on the local unit.
At the interbank foreign exchange, the rupee witnessed range-bound trading. It opened at 82.30 against the US dollar, then fell further to close at 82.38, registering a fall of 5 paise over the last close. It was moving in a tight range of 82.25 to 82.42.
On Wednesday, the rupee fell by 12 paise to close at 82.33 against the greenback.
“Asian currencies fell amid caution as traders awaited Thursday’s US inflation data for clues on how much the US Federal Reserve will raise rates,” said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar further added that along with weak regional currencies, dismal domestic economic data weighed on the Indian rupee. On the forward market, the one-year forward USD/INR premium declined as the central bank was at the receiving end.
“Spot USD/INR has been trading in the narrow range this week amid the central bank intervention on both sides. In the near-term, spot USD/INR is having resistance at 82.85 and support at 82.10,” Parmar noted.
The rupee consolidated in a narrow range after the inflation number, forex traders said.
“Inflation accelerated in September to a five-month high of 7.41 percent year-on-year as food prices surged. Food inflation, which accounts for nearly 40 percent of the CPI basket, rose 8.60 percent in September,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Dollar paired some of the gains after FOMC meeting minutes showed that several participants noted the importance of calibrating the pace of further tightening to mitigate the risk on the US economy, Somaiya said.
“We expect the USDINR (Spot) to quote in the range of 82.20 and 82.80,” Somaiya said.
According to NS Ramaswamy, Head of Commodities, Ventura Securities, the Indian rupee traded in an extremely narrow range for the second day ahead of US consumer inflation data to gauge the next leg of direction.
“The pair dropped to a record low of 82.68 on Monday but recovered slightly after RBI intervention.
“The focus now shifts to the US inflation data due later in the day. The pair could trigger a major gap-up or gap-down, if there is a major change in US data,” Ramaswamy said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.26 percent to 113.02.
Brent crude futures, the global oil benchmark, rose 0.32 percent to USD 92.85 per barrel.
In the domestic equity market, the 30-share BSE Sensex closed 390.58 points or 0.68 percent down at 57,235.33, and the broader NSE Nifty fell 109.25 points or 0.64 percent to 17,014.35.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets as they offloaded shares worth Rs 542.36 crore on Wednesday, according to exchange data.
On the domestic macroeconomic front, higher food prices drove retail inflation to a five-month high of 7.4 percent, while India’s industrial production slipped to an 18-month low, contracting by 0.8 percent in August, mainly due to a decline in output of the manufacturing and mining sectors.
The second consecutive month of rise in consumer price index (CPI)-based inflation will add to the pressure on the Reserve Bank of India (RBI) to again raise interest rates to tame high prices.
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