Mumbai: The rupee depreciated 9 paise to 73.55 against the US dollar in opening trade on Wednesday as muted domestic equities and strong American currency weighed on investor sentiment.
The local unit opened at 73.53 at the interbank forex market, then lost ground and touched 73.55 against the US dollar, down 9 paise over its last close of 73.46.
Asian currencies are trading weak against the USD. The rupee is likely to trade in an intra-day range of 73.35-73.65, said Abhishek Goenka, Founder, and CEO, IFA Global.
The rupee continues to follow a trading pattern wherein nationalized banks aggressively buy the dips to 73.10-73.15 and buy up to 73.45-73.50, Goenka said.
“Because foreign direct investment (FDI) related inflows are lined up and the reaction function of nationalized banks, we expect the rupee to continue trading in the 72.90-73.90 range,” he said.
Meanwhile, on the global front, US President Donald Trump on Tuesday instructed his officials to stop negotiating with the House Democrats on coronavirus stimulus.
“The overall risk sentiment was holding up until Trump said he was holding back the talks on fiscal stimulus until after the election. The yield on the US 10-year bond touched the highest level since June this year but retreated post president Trump’s comment”
Goenka said.
On the domestic front, the newly-constituted Monetary Policy Committee (MPC) of the Reserve Bank is scheduled to begin its three-day deliberations starting during the day. The decision of the rate-setting panel will be announced on October 9.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.15 percent to 93.82.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 264.26 points higher at 39,838.83 and the broader NSE Nifty rose 69 points to 11,731.40.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,101.76 crore on a net basis on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 1.48 percent to USD 42.02 per barrel.