Rupee rises for third session on softer crude, firmer dollar caps gains

The rupee gained on lower crude oil prices and RBI-linked dollar sales, but a stronger dollar ahead of the US Federal Reserve's policy decision limited the upside

The rupee appreciated for the third consecutive session on Tuesday, aided by lower crude oil prices and continued dollar sales by a state-owned bank, likely on behalf of the Reserve Bank of India (RBI), dealers said.

 

However, gains in the local currency were capped due to a rise in the dollar index ahead of the US Federal Reserve's policy decision due on Wednesday.

 

The domestic currency settled at 95.86 per dollar against the previous close of 95.89 per dollar. During the day, the rupee strengthened to 95.63 per dollar. However, it gave up some gains by the end of trade as oil marketing companies stepped up dollar purchases.

 

 

“The RBI intervention was there since morning, and crude had softened, supporting the rupee,” said a dealer at a state-owned bank. “The dollar index was also up because of the US Fed meeting,” the person added.

 

The dollar index rose to 101.62 from the previous day's 101.28. It measures the strength of the greenback against a basket of six major currencies. Investors also awaited US GDP growth and inflation data for cues on the future path of US interest rates, limiting gains in emerging market currencies, dealers said.

 

The rupee has depreciated by 1.09 per cent so far in the current financial year, while it has weakened by 6.24 per cent so far in the current calendar year. Since the West Asia conflict began, the currency has depreciated by 5.09 per cent.

 

“The Indian rupee appreciated for the third consecutive session, supported by a decline in imported commodity prices and a steady supply of dollars from banks. Despite mixed cues from regional Asian peers, the domestic currency found firm backing as banks stepped in to meet opportunistic bargain buying from importers. From a technical standpoint, the spot rupee pair finds immediate support in the 95.60 to 95.40 range, while 96.15 per dollar continues to pose a key overhead hurdle,” said Dilip Parmar, senior research analyst at HDFC Securities.