Mumbai, Feb 20 (PTI) The rupee appreciated 33 paise to close at 86.65 (provisional) against the US dollar on Thursday, supported by the weakening of the American currency in the overseas market.
Forex traders said there is a negative bias for the USD/INR pair amid a muted trend in domestic equities and the unabated foreign fund outflow is weighing on investor sentiments.
At the interbank foreign exchange, the rupee opened at 86.88 and touched the high of 86.58 and a low of 86.88 against the greenback during intraday. It ended the session at 86.65 (provisional) against the dollar, logging a gain of 33 paise from previous close.
On Tuesday, the rupee depreciated 10 paise to close at 86.98 against US dollar.
The forex market was closed on Wednesday on account of ‘Chatrapati Shivaji Maharaj Jayanti’.
“The Indian rupee gained strength after lingering within a confined range for the past five days. This ascent was propelled by foreign banks dollar selling and the persistent unwinding of long positions by market players,” said Dilip Parmar, Research Analyst, HDFC Securities.
The market dynamics for the rupee are progressively enhancing as the US dollar falters against both major and regional currencies.
In the short term, the spot USD/INR has support between 86.30 and 86.20, while 87.40 remains a strong resistance level to overcome.
Meanwhile, the US dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.21 per cent lower at 106.95.
Brent crude, the global oil benchmark, rose 0.04 per cent to USD 76.07 per barrel in futures trade.
Forex traders said on the domestic front, India’s economy is expected to demonstrate a strong momentum in the second half of the year but the rupee is battling global headwinds.
According to an article on ‘State of the Economy’ published in RBI’s February bulletin, high frequency indicators, like vehicles sales, air traffic, steel consumption and GST E-way bills, point towards a sequential pickup in momentum of economic activity during the second half of the fiscal 2024-25 and sustain moving forward.
However, a strong dollar, driven by US economic resilience and trade policy pivots, could exacerbate capital outflows from emerging economies, push risk premiums higher, and intensify external vulnerabilities, it added.
In the domestic equity market, the 30-share BSE Sensex was trading 203.22 points, or 0.27 per cent, lower at 75,735.96 points, while the Nifty was down 26.15 points, or 0.11 per cent, at 22,906.75 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 1,881.30 crore on net basis on Wednesday, according to exchange data.
