Rupee ends flat at 66.96 vs dollar; Fed meet in spotlight

Currency investors across the globe are cautiously awaiting the FOMC outcome

The rupee failed to maintain its early strong gains and settled almost flat at 66.96 against the American currency in a highly volatile trade ahead of a crucial US Fed meeting.

Cautious stance adopted by participants ahead of the US Federal Reserve's two-day meet starting on Tuesday largely influenced trading sentiment, a forex dealer said.

Currency investors across the globe are cautiously awaiting the FOMC (Federal Open Market Committee) outcome amid increasing speculations on a potential rate hike by the Federal Reserve, he added.

The rupee opened a tad higher at 66.96 from weekend's closing value of 66.97 at the Interbank Foreign Exchange (forex) market and strengthened further to 66.86 on strong dollar demand in early trade supported with rallying local equities.

However, home currency failed to keep momentum going and largely traded in a narrow range with positive bias in the absence of any market moving factors throughout the day before settling at 66.96, showing a mere gain of one paisa.

It hovered in a range of 66.86 and 66.98 during the day.

The local unit had recovered by 5 paise to close at 66.97 in Friday's trade on the back of country's improvement in trade deficit data.

Meanwhile, the US dollar retreated as market participants seem to be cashing up recent strong gains ahead of the US FOMC and Bank of Japan (BoJ) meetings this week.

The American currency got boosted on Friday after US core consumer price inflation in August rose stronger than expected.

The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.26 per cent at 95.81.

The Reserve Bank of India fixed the reference rate for the dollar at 66.8737 and euro at 74.6845.

In cross-currency trades, the rupee hardened further against the pound sterling to end at 87.38 from 88.20 and also rose against the euro to finish at 74.76 compared to 75.15 last Friday.

However, it remained under pressure against the Japanese yen and settled marginally lower at 65.74 as compared to 65.73 per 100 yens earlier.