Snapping Tuesday’s gains, Indian rupee closed 4 paise down at 67.10 against the US dollar at Interbank Foreign Exchange market (forex market) on Wednesday after demand for American currency rose among importers and banks. The local currency ahd opened 9 paise down at 67.15 against the US dollar. It had closed at 67.06 level a dollar on Tuesday. Domestic equity markets firm performance on Wednesday follwing buying in blue-chip companies amid mixed global cues restricted rupee’s losses. The BSE Sensex ended 69.73 points higher at 28,059.94, while NSE Nifty ended at 8,650.30, showing a gain of 17.70 points.
The Indian currency hovered in the range of 67.08 and 67.15 during the same time. Dollar’s firm trading other emerging currencies also contributed to rupee’s fall amid US Federal chair Janet Yellen’s speech on Friday to get a cue on interest rate.
On the rupee’s movement on Wednesday, Anindya Banerjee, currency analyst, Kotak Securities said, “Rupee continues to trade lackluster against US Dollar. The pair has been within a range of 66:70-67:30 for the past 6 weeks. With volatility staying low in most major asset classes globally, we see little scope for major shifts in currency regime over near term. However , taking a more intermediate term perspective, we see scope for rise on volatility, which could aid US dollar. Bias favours Dollar as long as prices sustain above 66:70 levels on spot.”
HSBC in a report on FX said, “The INR lagged other Asian currencies since the start of the year due to positioning adjustments and higher oil prices. However, many of the positive attributes of the INR, such as high carry, improving BoP fundamentals, and a domestic-led growth story, largely remain intact. The passing of the Good and Service Tax (GST) bill and appointment of Urjit Patel as the next RBI governor should be supportive for the INR in the near term. By unifying all indirect taxes into one, the GST will simplify the tax framework, which would help to attract further FDI inflows over time.”