The rupee strengthened in a narrow band and remained 7 paise lower at 83.55 (provisional) against the US dollar on Thursday, even as both the domestic equity benchmark indices touched all-time highs.
Forex traders found the rupee resistant to the dollar even after volatility in the dollar index due to CPI data and the US Fed’s policy decision.
At the interbank exchange rate, the local unit opened at 83.52 and finally settled at 83.55 (provisional) for the day, 7 paise lower (provisional) against the US currency.
On Wednesday, the rupee strengthened by 11 paise to close at 83.48 against the US dollar.
“The rupee was trading sideways in the range of 83.52-83.57 with stability. Even after volatility in the dollar index due to CPI data and Fed policy decision, the rupee was seen as resistant to the dollar.”
“Now, the rupee trend will remain range-bound, but the fundamental tone remains subdued as rupee consolidation remains near an all-time low. A major decline in the dollar below $103 will result in mighty buying in the rupee above 83.00, by which time a scratchy range of 83.20-83.75 will be observable, said Jateen Trivedi, VP Research – Commodities & Currencies, LKP Securities.
Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading at 104.81, up 0.17%.
Brent crude futures, the global crude oil benchmark, fell 0.84% to $81.91 a barrel.
On the domestic macroeconomic front, India’s industrial production growth declined to a three-month low of 5% in April 2024, mainly due to destitute performance of the manufacturing sector, although the mining and power segments performed well, according to official data.
Meanwhile, retail inflation continued to decline, hitting a one-year low of 4.75% in May on a slight decline in food basket prices, and remained in the Reserve Bank’s comfort zone of below 6%, government data showed on Wednesday.
In the domestic equity market, the 30-share BSE Sensex rose 204.33 points or 0.27% to close at a fresh high of 76,810.90 points. The broader NSE Nifty index rose 75.95 points, or 0.33%, to reach a record high of 23,398.90 points.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Wednesday, buying shares worth ₹ 426.63 crore, exchange data showed.
