Rupee advances 9 paise to close at 76.24 against USD on fall in crude oil

The rupee rose further by 9 paise to close at 76.24 against the US dollar on Friday following a fall in crude oil prices and weakness in the American currency in the overseas markets.

At the interbank forex market, the local unit opened at 76.15 against the greenback and witnessed an intra-day high of 76.12 and a low of 76.29.

The rupee settled at 76.24, registering a rise of 9 paise over its previous close of 76.33.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, fell 0.16 per cent to 98.62.

The rupee rebounded amid dollar softness and lower crude oil prices but trimmed the early gains following weaker domestic equities and foreign fund outflows, said Dilip Parmar, Research Analyst, HDFC Securities.

Ahead of the financial year-end, the rupee tends to show a high swing on the back of rebalancing-related inflows and outflows, Parmar added.

"The balance of risks for USDINR remains skewed to the upside following geopolitical worries and broad based selling by foreign institutions. Spot USDINR is expected to settle in the range of 76 to 76.50 this month, medium term direction remains bullish as long as it holds 75.70," Parmar noted.

Brent crude futures, the global oil benchmark, declined 1.27 per cent to USD 117.52 per barrel.

According to Emkay Global Financial Services, geo-political tensions continued to dominate market sentiments this week.

"The members of the G7 countries said that they are ready to apply additional sanctions as required and will spare no efforts to hold Putin and his supporters accountable. The US went ahead with imposing fresh sanctions on a dozen of Russian defence firms. Global markets are clearly worried that the sanctions will affect the economic recovery going forward," it said.

Crude oil prices have so far gained 10 per cent this week as European nations also mull sanctions on Russian oil and gas imports. US central bankers were very active this week as most of them were unanimous in their call for aggressive rate hikes this year to curb soaring inflation in the US.

"Any further upside in crude oil prices next week will put the rupee under pressure. This will trigger a move towards 77/77.14 levels again. On the contrary, any positive developments in the talks between Russia and Ukraine will help the Rupee strengthen towards 75.77/75.50 levels," it added.

On a weekly basis, the rupee depreciated 40 paise against the American currency.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee appreciated on Friday against the US Dollar, tracking the fall of the oil prices and marginally weaker greenback.

However, the local unit ended weaker for the week largely due to the volatility in crude oil prices which dampened sentiment for risk assets in the region.

"We might witness the Rupee appreciating further next week towards 76.00 levels as foreign-currency inflows are expected next week, which usually is seen at the end of the financial year," Iyer said.

However, investors will remain wary of the situation in Eastern Europe and escalation of tension there will push oil higher and in turn keep appreciating bias limited, Iyer added.

On the domestic equity market front, the BSE Sensex ended 233.48 points or 0.41 per cent lower at 57,362.20, while the broader NSE Nifty slumped 69.75 points or 0.4 per cent to 17,153.00.

Foreign institutional investors remained net sellers in the capital market on Thursday as they sold shares worth Rs 1,740.71 crore, according to stock exchange data.