Rupee gained by 11 paise to 81.61 per dollar on Wednesday, up from its previous close amid ease in the value of the greenback against a basket of six peers. Global crude oil benchmarks rebounded putting pressure on the currency. The dollar index was trading 0.1 per cent lower at 101.6. Sharp gains in the local unit were prevented by a rebound in crude oil prices amid optimism on-demand recovery in China. Brent crude futures were trading 0.4% higher at $86.5 per barrel at the last count. WTI futures, too, were trading 0.3% higher at $80.4 per barrel at the last count.
“The RBI protected the sharp appreciation in the rupee by intervening in the spot market around 80.90-81.00 levels, which pushed the speculators to unwind their short positions in the USD. Further, buying of USD by oil companies amid a rise in crude oil prices coupled with FII’s remaining net sellers have mounted pressure on the rupee,” said Amit Pabari of CR Forex. Market participants remain cautious ahead of the important Union Budget that is scheduled next week. Any announcement of a widening of the fiscal deficit could keep the rupee weighed down.
“A tussle between the buyers and sellers is likely to continue as inflows pertaining to Adani FPO and RBI bond issue shall keep the rupee on a stronger note and RBI’s intervention on the other side could limit the gains near 80.80 levels. Well, the broad range would remain between 80.80 to 82.10,” Pabari added.
The US$INR pair is expected to face rejection near the 81.80-82.00 zone and is likely to slide towards 81.30 following an improvement in global risk appetite and weakness in the dollar. The further expectation of weaker US advance GDP numbers, which is due on Thursday could restrict the recovery in the dollar. “The pair is still hovering below the 20-day EMA, which could act as key resistance. As long as it remains below 81.80 the pair is likely to move towards the immediate support at 81.30,” said analysts at ICICIdirect.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, in the next couple of sessions, advance GDP and core PCE index numbers from the US will be keenly eyed and better-than-expected economic data could extend gains for the dollar. “We expect the USDINR(Spot) to trade sideways and quote in the range of 81.10 and 81.60,” he said.
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