The rupee declined by seven paise against the US dollar on Wednesday, July 7, to settle at 74.62 (provisional) tracking a stronger American currency and rising crude oil prices – both of which weighed on investor sentiment. At the interbank foreign exchange market, the local unit opened at 74.60 against the dollar and hovered in the range of 74.59 to 74.79 during the session. In an early trade session, the domestic unit fell seven paise to 74.62 against the greenback. On Tuesday, the local unit closed at 74.55 against the dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, declined 0.02 per cent to 92.52. According to forex traders, the local unit is trading in a narrow range ahead of the release of the minutes of US Federal Open Market Committee meeting.
”Yesterday, the USDINR pair jumped again above 74.60 on rising in the crude oil prices as the OPEC+ meeting ended without any result and recovery in the US dollar index above 92.60 mark. One thing is sure that we won’t see calm, composed, and cool momentum in the USDINR pair. It is expected to remain volatile and shaky,” said Mr Amir Pabari, MD, CR Forex.
”Broadly, the risk-aversion sentiment seems to return ahead, and we could see a rush of importers covering the dollars on every pullback in the USDINR pair. We expect the pair to remain well supported around the 73.80-74.00 mark over the short-term but the rally could be capped near 75-75.20 on likely RBI’s intervention and exporter’s selling,” he added.
”After closing at its strongest level since the beginning of the pandemic at 72.61 in May-21, the rupee has been on a weak turf in the month of Jun-21. The recent weakness in INR appears to be in sync with strengthening bias creeping in for the USD, which seems to have received a shot in the arm post Federal Reserve’s Jun-21 monetary policy review,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings and Research.
Meanwhile the relatively strong economic performance of US visà-vis other developed economies would create tailwinds for the US dollar. We continue to expect USDINR to move up towards 75.0 by Sep21, and further towards 77.0 by Mar-22,” added Mr Choudhary.
On the domestic equity market front, the BSE Sensex ended 193.58 points or 0.37 per cent higher at 53,054.76, while the broader NSE Nifty climbed 61.40 points or 0.39 per cent to 15,879.65.
“After a muted opening, the Nifty/Sensex slipped to intraday lows of 15779.70/52751.75 before reversing sharply thereafter. While key indices hovered in the range of 15800-15850/ 52820-52900, the last hour of the trade helped surpass the intraday hurdle of 15850/52900 which is broadly positive for the market,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.
According to exchange data, the foreign institutional investors were net sellers in the capital market on July 6 as they offloaded shares worth Rs 543.30 crore. Brent crude futures, the global oil benchmark, advanced 1.69 per cent to $ 75.79 per barrel.
Waiting For A Big SCOOP