The rupee recovered from initial losses to settle higher by 13 paise at 71.71 against the US currency on Tuesday, propped up softening crude oil prices and gains in domestic equity markets.
Forex traders said the rupee consolidated in a narrow range following lack of cues on the domestic as well as the global front. During the day, the domestic unit fluctuated between a high of 71.68 and a low of 72.
“The Indian rupee opened lower at 71.97 a dollar, tacking cues from most Asian currencies as a lack of progress in US-China trade talks had an impact on risk appetite. However, the rupee recovered from day’s low amid stronger domestic equity and lower crude oil prices,” said V K Sharma, Head - PCG & Capital Market Strategy, HDFC securities.
Sharma further said that the rupee expected to trade with a bearish bias given global uncertainty and slower domestic growth. Technically, spot USDINR has support at 71.25 and resistance at 72.41, he said.
Brent futures, the global oil benchmark, traded at USD 61.95 per barrel, down 0.78 per cent. “Market participants have been cautious ahead of the important FOMC and ECB policy meeting minutes that will be released later this week.
For the week we expect the USDINR(Spot) to determine a trend only on a break of range of 71.50 and 72.20,” Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services Private Ltd said. Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they pulled out Rs 915.37 crore on Tuesday, exchange data showed.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.04 per cent to 97.83. The 10-year government bond yield was at 6.48 per cent on Tuesday.
On the domestic market front, the 30-share Sensex ended 185.51 points, or 0.46 per cent, higher at 40,469.70. The broader NSE Nifty rose 55.60 points, or 0.47 per cent, to settle at 11,940.10.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.7131 and for rupee/euro at 79.3166. The reference rate for rupee/British pound was fixed at 92.7011 and for rupee/100 Japanese yen at 65.89.