New Delhi: The rupee fell by 12 paise to close at 82.33 against the US dollar on Wednesday due to sustained foreign fund outflows and a stronger dollar in the overseas markets.
Besides, risk aversion sentiment among investors ahead of the release of US Fed minutes and inflation data weighed on the local unit.
At the interbank foreign exchange market, the local currency opened lower at 82.32 and later fell further to 82.3750 against the American currency. It recovered some ground to close at 82.33, registering a decline of 12 paise over its previous close.
On Tuesday, the rupee rebounded from its all-time low to close 19 paise higher at 82.21 against the US dollar.
“In line with the dollar index, the rupee marked another steady day. So far this week, the rupee has been trading in a narrow range and closing near 82.32,” said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar said a rebound in the domestic equities and the central bank’s intervention ahead of the crucial retail inflation release supported the rupee on Wednesday.
In the near-term, spot USD/INR is expected to trade in the range of 82.10 to 82.80, Parmar noted.
Traders said investors remained cautious ahead of the release of key domestic macro data.
“Rupee traded in a narrow range in the last couple of sessions as investors remain cautious ahead of inflation numbers,” Motilal Oswal Financial Services said, adding that the central bank is yet to get surging inflation under control and will need to press forward with tightening monetary policy.
“Focus will be on the FOMC meeting minutes and hawkish comments are likely to strengthen the greenback.
According to Praveen Singh, AVP- Fundamental currencies and Commodities analyst, Sharekhan by BNP Paribas, “The domestic currency is trading with a loss of 0.10 per cent in the spot market as the traders await India’s inflation and industrial production data.”
On Thursday’s US CPI data will be of prime importance for the financial markets, though barring a big miss the US Dollar is expected to be well bid.
In twin blows to Indian economic revival, higher food prices drove retail inflation to a five-month high of 7.4 per cent while factory output fell for the first time in 18 months.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, declined 0.01 per cent to 113.21.
Global oil benchmark Brent crude futures rose 0.39 per cent to USD 94.66 per barrel.
On the domestic equity market front, the 30-share BSE Sensex advanced 478.59 points or 0.84 per cent to end at 57,625.91, while the broader NSE Nifty rose 140.05 points or 0.82 per cent to 17,123.60.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets as they offloaded shares worth Rs 542.36 crore on Wednesday, according to exchange data.
