- Rupee closed higher at 94.26 against the US dollar, up 23 paise on Thursday
- Brent crude fell below $100 per barrel amid hopes of US-Iran peace talks
- US dollar index declined to 97.86, easing pressure on the rupee
The rupee pared initial losses and settled for the day on a positive note, higher by 23 paise at 94.26 (provisional) against the greenback on Thursday, as Brent crude and the US dollar index retreated from their elevated levels.
Forex traders said Brent oil prices have fallen below USD 100 per barrel on a rise in investor risk appetite in global markets on hopes of peace between the US and Iran.
However, factors such as unabated foreign capital outflows and safe-haven dollar demand from importers capped sharp gains for the rupee.
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At the interbank foreign exchange market, the rupee witnessed high volatility. It opened at 94.77 against the US dollar, registering a fall of 28 paise over its previous close.
In intraday trade, the USD/INR pair touched an intraday low of 94.90 and a high of 94.08 against the American currency.
The rupee finally settled at 94.26 (provisional), registering a rise of 23 paise over its previous close.
On Wednesday, the rupee appreciated 69 paise to close at 94.49 against the US dollar.
"We expect the rupee to trade with a positive bias on improved global risk sentiments amid easing tensions between the US and Iran and softening of global crude oil prices. A decline in the US dollar may also support the rupee.
"However, dollar demand from importers and FII outflows may cap sharp gains. USD-INR spot price is expected to trade in a range of 93.80 to 94.40," said Anuj Choudhary, Research analyst at Mirae Asset ShareKhan.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.86, down 0.16 per cent.
Brent crude, the global oil benchmark, was trading lower by 2.23 per cent at USD 99.01 per barrel in futures trade.
On the domestic equity market front, Sensex declined 114 points to settle at 77,844.52, and the Nifty was down 4.30 points to 24,326.65.
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Foreign Institutional Investors offloaded equities worth Rs 5,834.90 crore on Wednesday, according to exchange data.
Meanwhile, US President Donald Trump on Wednesday threatened Iran with more bombing if it doesn't reopen the Strait of Hormuz, amid a report that the warring sides were nearing an agreement to end the war.
US media outlet Axios reported, quoting US officials and two other sources, that the US and Iran were getting close to a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations.
The US expects Iranian responses on several key points over the next 48 hours, Axios reported, adding that nothing has been agreed yet. This was the closest the parties had been to an agreement since the war began. PTI DRR HVA
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