Rupee rebounds from multi-month lows, up 8 paise at 68.34

The rupee today rebounded from near 18-month lows to close with gains of 8 paise at 68.34 against the US dollar as the greenback fell against global currencies after minutes of the Federal Reserve committee revealed a relatively dovish stance over interest rate hikes.

A rally in domestic equities along with some bearish trend in crude prices further bolstered the currency momentum, apparently uplifting the forex mood.

The US dollar was on the back foot in reaction to the Federal Reserves slightly dovish May meeting minutes, which showed some tolerance to higher inflation.

"Rupee bounced from yesterday's 18 month low as the dollar lost its shine after FOMC minutes reflected a dovish stance. Equity indices' bounced back from yesterday's fall also boosted rupee's demand, but the gains were limited with Brent refusing to retract much from the 80 mark," Anand James, Chief Market Strategist at Geojit Financial Services said.

The rupee resumed higher at 68.30 from previous close of 68.42 at the Interbank Foreign Exchange (Forex) market on bouts of dollar selling by exporters and banks.

It later moved in a narrow range of 68.28 and 68.42 for most part of the day before ending at 68.34, revealing a smart gain of 8 paise, or 0.12 per cent.

Yesterday, the home unit had lost 38 paise to hit a near 18-month low of 68.42 against the US dollar.

The RBI, meanwhile, fixed the reference rate for the dollar at 68.3872 and for the euro at 80.1430.

The rupee came off from early highs in afternoon trade due to some oil-related bids and greenback demand from foreign banks, a dealer said.

Crude prices slipped on expectations that OPEC members will step up production in the face of worries over supply from both Venezuela and Iran. A surprise build up in crude oil inventories in the US also weighed on energy market.

The Brent crude futures, an international benchmark, was trading lower at USD 78.80 a barrel in early Asian trade.

Meanwhile, the yield on the benchmark 10-year government bond maturing in 2028 rose to 7.87 per cent.

The dollar index, which measures the greenback's value against a basket of six major currencies was down at 93.69 after recording tops near 94.20 - the level last seen in mid- December 2017.

In the cross currency trade, the rupee gained further ground against the euro to settle at 80.06 as compared to 80.09 and also edged up against the Japanese Yen to end at 62.34 per 100 yens from 62.35 yesterday.

The local unit, however dropped against the pound sterling to close at 91.58 per pound from 91.14 earlier.

In forward market today, premium for dollar declined owing to mild receiving from exporters.

The benchmark six-month forward premium payable in September moved down to 91-93 paise from 93.50-95.50 paise and the far-forward February 2019 contract edged down to 229-231 paise from 230-232 paise previously.