Mumbai, Aug 23 (PTI) The rupee traded in a narrow range and settled higher by 3 paise at 83.90 against the American currency on Friday, as traders remained cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium.
Forex traders said weak US Dollar, foreign fund inflows and a positive tone in the domestic markets supported the rupee. However, overnight gains in crude oil prices capped sharp gains.
At the interbank foreign exchange market, the local unit opened weak at 83.93 and touched an intraday high of 83.85 against the US dollar.
The domestic currency finally settled at 83.90, 3 paise higher from its previous close.
On Thursday, the rupee traded in a narrow range and settled lower by 3 paise at 83.93 against the American currency.
“We expect the rupee to trade with a slight negative bias as traders remain cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium which could provide some cues on Fed’s path to cut interest rates.
“Weak US and Asian markets and a recovery in crude oil prices may pressure the rupee while positive domestic markets may support the rupee at lower levels,” said Anuj Choudhary — Research Analyst at Sharekhan by BNP Paribas.
“Asian shares sputtered near-record highs with Powell’s speech in focus as most equity markets steadied on Friday with European equities the only ones which moved substantially higher. The US data particularly the falling CPI has given a green light to FED to cut rates. Asian currencies were also slightly weak today (Friday),” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.10 per cent lower at 101.40.
“Dollar Index was at 101.36, slightly up but has still registered losses of around 1 per cent this week heading for its fifth consecutive losing week. The weakening followed concerns about a weakened economy with jobs data getting substantially revised,” Bhansali said.
Brent crude, the global oil benchmark, advanced 1.05 per cent to USD 78.03 per barrel.
On the domestic equity market front, Sensex advanced 33.02 points, or 0.04 per cent, to close at 81,086.21 points. The Nifty rose 11.65 points, or 0.05 per cent, to 24,823.15 points.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 1,944.48 crore, according to exchange data.
The country’s forex reserves jumped USD 4.546 billion to USD 674.664 billion during the week ended August 16, according to data by the Reserve Bank of India.
On the domestic macroeconomic front, the minutes of the last Monetary Policy Committee (MPC) released by the Reserve Bank of India (RBI) on Thursday noted that the calibrated increase in policy repo rate by 250 basis points since May 2022 and subsequent change of stance to the withdrawal of accommodation have facilitated gradual disinflation over 2022-23.
According to RBI Governor Shaktikanta Das, the current policy rate of 6.5 per cent is broadly balanced, and any justification for policy easing at this juncture can be misleading.
“The Indian rupee was bought till 83.85 but was sold off once the inflows were over and the USD received was got bought by the RBI, taking it back to the level of 83.89. We expect a range of 83.75 to 84.05 on Monday as we await Fed chief’s comments tonight,” Bhansali added.
