Rupee inches 3 paise higher to 77.58 against US dollar

Brent crude futures, the global oil benchmark, rose 0.55 per cent to USD 118.05 per barrel.

Mumbai: The rupee inched 3 paise higher to close at 77.58 against US dollar on Friday, supported by positive domestic equities and weakness of the American currency overseas.

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Forex traders said the rupee consolidated in a narrow range as elevated crude oil prices, fiscal deficit concerns and persistent FII outflows weighed on the local unit.

At the interbank forex market, the rupee opened at 77.60 against the greenback and moved in a range of 77.57 to 77.67 in the day’s trade.

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The rupee finally ended at 77.58, higher by 3 paise over its previous close of 77.61.

“Rupee continued to trade in a narrow range and volatility remained despite gains in domestic equities. Dollar retraced after the US preliminary GDP number came in below estimates,” said Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services.

Euro and pound got support at lower levels and extended support, Somaiya said, adding that “we expect the USD-INR to trade sideways and quote in the range of 77.20 and 77.80.”

On the domestic equity market front, the BSE Sensex advanced 632.13 points or 1.17 per cent to end at 54,884.66, while the broader NSE Nifty jumped 182.30 points or 1.13 per cent to 16,352.45.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.05 per cent to 101.78.

Foreign institutional investors remained net sellers in the capital market on Friday as they offloaded shares worth Rs 1,943.10 crore, as per stock exchange data.

Brent crude futures, the global oil benchmark, rose 0.55 per cent to USD 118.05 per barrel.

Jigar Trivedi – Research Analyst – Commodities & Currencies Fundamental, Anand Rathi Shares & Stock Brokers, said the dollar index hit a 20-year peak above 105 mid-month, but started losing ground in the last few days as signs are emerging that aggressive US Fed action may already be slowing economic growth and Fed hawkishness has peaked out.

“Still, the rupee spot has been hovering near an all-time low of 77.79 touched on 17th May, amid weakness in equity markets, elevated crude oil prices and persistent FII outflows,” Trivedi said.

Meanwhile, the government’s recent cut on fuel excise duty and increased subsidies on food and fertilisers are set to widen the country’s fiscal balance further and we might see rupee heading to new lows going forward, Trivedi noted.

“The dollar index traded flat near USD 102. And crude rallied above USD 115 making the rupee weak,” said Jateen Trivedi, VP Research Analyst at LKP Securities, adding the “Rupee can be seen in a range of 77.25-77.75”.

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