Rupee hits 11-month high; opens 28 paise higher against US dollar

The rupee on Thursday opened 26 paise higher to hit an 11-month high of 68.30 against the US dollar after the US Federal Reserve hinted at possible rate cuts ahead. 

The domestic unit on Wednesday declined by 7 paise to close at 68.58, pressured by persistent foreign fund outflows and firming crude oil prices.

Rupee on Wednesday consolidated in a narrow range as most market participants were cautious ahead of the important Fed Chairman testimony and the FOMC minutes that was released late evening yesterday. Dollar was weighed down against its major crosses after the Fed Chairman set the stage for a rate cut as early as July. 

The Fed Chairman in his testimony mentioned that the US economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war. Uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the US outlook suggesting that a rate cut in the July meeting in factored in by the market. "Today, USD/INR pair is expected to quote in the range of 68.10 and 68.75," says Motilal Oswal Financial Services (MOFSL) in its daily currency report.

In the commodities market, US oil futures hit their highest in over a month on Thursday as a potential hurricane threatened crude output in the Gulf of Mexico and as an incident involving a British tanker in the Middle East highlighted ongoing tensions there, Reuters reported. 

In the equities market, Asian stocks gained and the dollar slipped in the early morning trade after Federal Reserve Chair Jerome Powell reinforced prospects of a US interest rate cut later this month.