Rupee Extends Gaining Streak Against US Dollar Ahead Of FOMC Decision

The rupee extended its gaining streak against the US dollar to fifth consecutive session on Wednesday, as banks persistently sold the greenback for foreign fund inflows into corporates and debt market. The rupee ended 13 paise higher at 86.44 against US Dollar.

Most traders remained on the sidelines as they await the outcomes of the US Federal Open Market Committee's policy decision, scheduled to be released later today.

This surge in the rupee has been largely fuelled by a shift in foreign investor activity. After months of persistent selling, FIIs finally turned net buyers, said Amit Pabari, managing director, CR Forex Advisors.

The domestic unit opened 7 paise weaker at 86.64 against the greenback as the dollar index rebounded. During the onshore session, the dollar index extended gains to the day's high of 103.72, against Tuesday's close of 103.24. As of 3:38 p.m., the dollar index was 0.35% higher at 103.60.

"Markets remained cautious ahead of the Federal Reserve's policy decision, where rates are widely expected to remain unchanged. Market participants will closely watch the Fed’s quarterly projections for insights into the interest rate trajectory," said Ritesh Bhansali, director, Mecklai Financial Services Ltd.

The Indian unit erased losses against the greenback and rose 10 paise to the day's high of 86.47 a dollar.

On Tuesday, the rupee ended 23 paise higher at 86.57 against the US dollar. It settled at three-week high against the US dollar on Tuesday for two days in a row.

"The rupee is expected to be in the range of 86.45 to 86.80. Exporters are advised to take hedges above 86.70 levels and importers are advised to take hedges below 86.55," Bhansali said.