The rupee on Wednesday bounced back by 14 paise against the US currency to close at 67.21 on fag-end selling of dollars by banks and exporters amid sustained foreign capital inflows.
The rupee resumed lower at 67.45 per dollar against Tuesday’s closing level of 67.35 at the Interbank Foreign Exchange (Forex) market and dropped further to 67.51 on initial dollar demand from banks and importers.
However, it recovered afterwards to 67.1750 on fresh selling of dollars on the back of recovery in the equity market before ending at 67.21, showing a gain of 14 paise or 0.21%.
It hovered in a range of 67.51 and 67.17 during the day. The dollar index was up by 0.17% against a basket of six currencies in the late afternoon trade.
In the global market, the euro was weaker against the dollar and the yen during the late Asian trade, ahead of the European Central Bank’s policy-setting meeting later this week. Investors largely remained on the sidelines given a lack of fresh trading cues before hearing from the ECB’s policy meeting scheduled for Thursday.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 462.86 crore, as per provisional data released by the stock exchanges.
Pramit Brahmbhatt of Veracity Financial Services said, “The rupee opened on a negative note taking cues from global as well as domestic equity market. But maintaining a cap of 67.50 levels, we saw the rupee trading stronger as domestic equity market too recovered well from lower levels.
During Wednesday’s trading session, Nifty gained 47 points on back of short covering.” To end the day, the rupee closed with a gain of 14 paise at 67.21/dollar.
Trading range for spot dollar/rupee pair is expected to be within 66.80 to 67.50 levels.
In forward market, premium for dollar moved up further on sustained paying pressure from corporates. The benchmark six-month premium for August firmed up further to 236.5-238.5 paise from 229.5-231.5 paise on Tuesday and far forward February 2017 contract also hardened further to 443.5-445.5 paise from 435-437 paise.
The RBI fixed the reference rate for the dollar at 67.4632 and euro at 74.0611. In cross-currency trades, the rupee recovered against the pound sterling to end at 95.65 from the last closing level of 95.70 and also recouped against the euro to close at 73.69 from 74.16.
However, the domestic unit moved down further against the yen to settle at 59.76 per 100 yen from 59.64.