Rupee trades higher, but cues point to lower movement; opens at 88.75/$

Indian Rupee today: The domestic currency opened three paise higher at 88.75 against the greenback on Wednesday

The Indian Rupee opened higher but remained under pressure from a strengthening dollar on Wednesday, even as foreign flows eye domestic equity market for new offerings. 

 

The domestic currency opened three paise higher at 88.75 against the greenback on Wednesday, according to Bloomberg. The currency has fallen 3.67 per cent so far this year, reaching an all-time low of 88.80 last week.

 

Although foreign funds bought shares on Tuesday, the inflows were likely driven by investments in newly opened initial public offerings (IPOs), Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. The dollar remained firmly bid at 88.71/72 levels and failed to move lower, keeping the rupee range-bound through the session, he said.  

LG Electronics India's IPO got off to a strong start on Tuesday, with its share sale fully subscribed on day one, while WeWork India’s IPO sailed through on the final day of subscription. Meanwhile, Tata Capital’s mega share sale was three-fourths covered, reflecting mixed signals.

 

According to NSE provisional data, foreign portfolio investors bought shares worth ₹1,440.6 crore on Tuesday, snapping a 10-day selling spree. 

   

For Wednesday, cues are negative for the rupee as the dollar index strengthened and Asian currencies weakened, while equities showed a slightly negative tone, analysts said. 

 

A breakout in the rupee is possible unless the Reserve Bank of India (RBI) continues to defend the crucial 88.80 level, Bhansali said. The rupee is expected to open around 88.80 and trade in the 88.50-89.00 range for the day, as IPO-related inflows remain subdued with most subscriptions expected on the final day, he added. 

  

The dollar index extended its gains to a four-week high, supported by weakness in the euro and yen, as well as safe-haven demand amid a US government shutdown that has delayed key economic data releases. The measure of the greenback against a basket of six major currencies was up 0.34 per cent at 98.90.

 

In commodities, crude oil prices rose after Opec+ decided on a modest increase in production. Brent crude price was up 0.84 per cent at 66.00 per barrel, while WTI crude prices were higher by 0.94 per cent at 62.31 per barrel, as of 9:00 AM IST.