Rupee breaks out of tight range, opens 54 paise stronger at 88.26/$

Indian Rupee today: The domestic currency opened 54 paise higher at 88.26 against the greenback on Wednesday

The Indian rupee broke out of its recent range-bound trade near record low levels to open higher on Wednesday, supported by a decline in both dollar and crude oil prices.

 

The domestic currency opened 54 paise higher at 88.26 against the greenback on Wednesday, according to Bloomberg. The currency rose to the 88.03 level, but has fallen 3.16 per cent so far this year, the worst-performing Asian currency. 

 

With equities declining on Tuesday, the Indian rupee was sold off and touched the Reserve Bank of India’s (RBI) threshold of 88.80, where it remained for most of the day, marking its lowest closing level, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said.

 

   

Foreign portfolio investors (FPIs) were net sellers worth ₹1,508.53 crore, while domestic institutional investors (DIIs) continued their steady buying trend in recent months.

 

Amid softness in the US dollar, the rupee is expected to open higher at 88.72 and trade in a narrow range of 88.50 to 89.00 through the day, with limited volatility, Bhansali said. "The RBI has been defending the 88.80 level for several sessions, and despite FPI inflows in recent days, the rupee has weakened, with the central bank being the only significant dollar seller."

 

The safe-haven demand for the US dollar and gold has kept both assets elevated in recent sessions. Exporters may consider partial hedging at 88.80, while importers are advised to buy on dips, Bhansali said.

 

The Wholesale Price Index (WPI)-linked inflation cooled to 0.13 per cent in September from 0.52 per cent in August. The positive rate of inflation in September was primarily due to an increase in prices of food products, manufacturing, non-food articles, non-metallic mineral products, textiles, and transport equipment. India’s retail inflation moderated significantly in September to hit a 99-month low of 1.54 per cent. 

 

The focus now shifts to the upcoming US CPI data, which will play a key role in guiding dollar and rupee movements, Jateen Trivedi, VP research analyst - commodity and currency, LKP Securities, said. "The rupee is expected to trade within a range of 88.45-89.25."

 

The dollar index fell slightly from the previous session as the market anticipated concerns over US-China trade tensions amid the US government shutdown. The measure of the greenback against a basket of six major currencies was down 0.17 per cent at 98.88.

 

In commodities, crude oil prices extended their fall as the US shutdown continues into the third week. Brent crude price was lower by 0.45 per cent at 62.11 per barrel, while WTI crude prices were lower by 0.43 per cent at 58.46 per barrel, as of 9:05 AM IST.