Rupee slips 3 paise to close at 83.31 against dollar amidst strong US currency

Mumbai: The rupee's closing at 83.31 against the US dollar on Wednesday marked a decline of 3 paise, primarily influenced by a robust American currency in the global market. This movement was also attributed to the rupee's consolidation within a narrow range amidst a relatively subdued performance in domestic equities.

Forex analysts noted that while the local unit commenced trading at 83.31 and reached a low of 83.34 against the greenback, it eventually settled at 83.31 (provisional), registering a slight fall from its previous close. Interestingly, the rupee had shown signs of recovery on Tuesday, closing 10 paise higher at 83.28 against the US dollar after having touched an all-time low.

Factors contributing to this currency shift included the dollar index, reflecting a 0.18 per cent increase at 103.75, denoting the dollar's strengthened position against a basket of six major currencies. Additionally, Brent crude futures, a crucial global oil benchmark, experienced a 0.79 per cent decline, resting at $81.80 per barrel. This correction in oil prices served as a supportive factor for the rupee amidst other market movements.

The resurgence of the US dollar followed the release of slightly hawkish minutes from the Federal Open Market Committee (FOMC) meeting held on Tuesday. Analysts like Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, projected a potential positive bias for the rupee, expecting dollar inflows due to forthcoming IPOs in the domestic markets. However, the optimistic tone surrounding the US dollar and anticipations of a potential surge in crude oil prices were expected to temper any sharp upside in the rupee.

Choudhary suggested an anticipated trading range of 83 to 83.60 for the USD-INR spot price, taking into account these various market dynamics. In tandem, the domestic equity market observed a marginal rise, with the Sensex increasing by 92.47 points or 0.14 per cent to settle at 66,023.24 points, while the Nifty advanced 28.45 points or 0.14 per cent to 19,811.85 points.

Foreign Institutional Investors (FIIs) were noted as net sellers in the capital markets on Tuesday, selling shares worth Rs 455.59 crore, according to exchange data, further contributing to the market's nuanced movements.