Rupee slips 1 paisa to settle at 83.44 against US dollar

The rupee paired its initial gains and settled 1 paisa lower at 83.44 (provisional) against the US dollar on Wednesday in sink with the domestic equity markets that turned choppy at the fag-end of the session.

Forex traders said the gaining momentum in the local unit was snapped by a firm American currency and higher level of crude oil prices in the overseas market.

At the interbank foreign exchange market, the local unit opened strong at 83.39 and moved in the range of 83.34 and 83.48 against the greenback during the session. The local unit finally settled at 83.44 (provisional) against the American currency, registering a loss of 1 paisa from previous closing level.

• Also read: Weekly Rupee View: INR range-bound despite negative fundamentals

On Tuesday, the rupee had settled 12 paise higher at 83.43 against the US dollar.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said the rupee traded on a volatile note, showing strength at the opening but giving up gains as the dollar index found support near 104.80. "The rupee is anticipated to continue trading in a volatile range between 83.25-83.60."

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.01 per cent at 104.88.

Analysts said the dollar index fell initially as the US data showed the growth in retail sales was lower than expected, though the currency recovered with May industrial output numbers topping the forecast.

Officials of the US Federal Reserve also indicated a hawkish stance to continue, dousing hopes of an interest rate cut until December.

Brent crude futures, the global oil benchmark, declined 0.13 per cent to $85.22 per barrel.

In the domestic equity markets, the 30-share BSE Sensex inched up 36.45 points, or 0.05 per cent, to 77,337.59 points. The broader NSE Nifty fell 41.90 points, or 0.18 per cent, to 23,516.00 points. Both the indices touched their fresh peak levels during intra-day.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth ₹2,569.40 crore, according to exchange data.

Analysts attributed the strong FII buying to the firm domestic macroeconomic outlook and a sharp fall in the US treasury yield.

The government data released on Tuesday showed the net direct tax collection grew 21 per cent to over ₹4.62 lakh crore so far this fiscal on higher advance tax payments by corporates, reflecting robust economic activity.

Fitch Ratings on Tuesday raised India's growth forecast for the current fiscal to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment.