Rupee Ends Flat As US Dollar Rebounds
The Indian unit settled at Rs 83.50 against the US dollar, unchanged from Wednesday's closing. It opened at Rs 83.46, appreciating 4 paise against the greenback, according to Bloomberg data.
The rupee closed flat on Thursday as the dollar index recovered after hitting over one-month low and as banks bought the greenback on behalf of importers, forex traders said.
The Indian unit settled at Rs 83.50 against the US dollar, unchanged from Wednesday's closing. It opened at Rs 83.46, appreciating 4 paise against the greenback, according to Bloomberg data.
"Rupee opened higher but dollar again was bought due to constant outflow from FPIs and oil taking it back to pivot of $83.50 where RBI stood as firm as a wall," said Anil Kumar Bhansali, head, treasury and executive director at Finrex Treasury Advisors LLP
"Rupee could open higher tomorrow and remain in a range of Rs 83.37-83.57 as the market awaits for US jobless claims data today," he said.
The dollar index, which measures the greenback's strength against major currencies across the globe, rose 0.07% to 104.42 during the day.
The index touched a low of 104.08 in the morning, the lowest level since April 10, as a knee-jerk reaction to the softer-than-expected the US CPI. As of 3:42 p.m., the dollar index was at 104.40.
The US CPI came in at 3.4% year-on-year in April from 3.5% in March, which is what a Bloomberg survey forecasted. Sequentially, inflation slowed to 0.3% in April from 0.4% in the preceding month. The sequential figure is less than 0.4%, analysts estimated in Bloomberg's survey.
"Weak US inflation data and unimpressive retail sales raise the likelihood of a Fed interest rate cut in the near term. Bets for a September rate cut firm up. The dollar index and 10 year US Treasury yields cooled while equities rallied," said Kunal Sodhani, vice president at Shinhan Bank.
"Despite the recent rise in India’s trade deficit, the rupee should cheer amidst the fall in the dollar," Amit Pabari, managing director at CR Forex Advisors said.
India's trade deficit widened to $19.1 billion in April 2024, up from $14.44 billion a year earlier, primarily due to a surge in gold and oil imports. Gold imports more than doubled to $3.11 billion, and oil imports increased to $16.46 billion. Additionally, rising oil prices in April, nearing recent highs, further exacerbated the trade deficit, Pabari added.
"The Indian rupee is expected to be in the range of 83.40 to 83.60. Exporters are advised to take hedges above 83.55 levels and importers are advised to take hedges below 83.40 levels," said Ritesh Bhanshali, director, Mecklai Financial Service Ltd