Rupee Rises 29 Paise To 79.45 Against US Dollar Tracking Heavy Buying In Domestic Equities

At the interbank forex market, the local unit opened strong at 79.32 against the greenback and witnessed an intra-day high of 79.26 and a low of 79.48

Softening crude oil prices and easing inflationary pressures supported Indian rupee, forex traders said.

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Indian currency, the rupee, gained 29 paise to end at 79.45 against the US dollar on Wednesday as heavy buying in domestic equities and persistent foreign capital inflows strengthened investor sentiment, the PTI reported.

According to the report, besides, softening crude oil prices and easing inflationary pressures supported the domestic unit, forex traders said. At the interbank forex market, the local unit opened strong at 79.32 against the greenback and witnessed an intra-day high of 79.26 and a low of 79.48.

It finally ended at 79.45, registering a rise of 29 paise over its previous close of 79.74. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.06 per cent to 79.74.

On the domestic equity market front, the BSE Sensex ended 417.92 points or 0.70 per cent higher at 60,260.13, while the broader NSE Nifty advanced 119 points or 0.67 per cent to 17,944.25. Brent crude futures, the global oil benchmark, slipped 0.06 per cent to $92.28 per barrel.

Foreign institutional investors remained net buyers in the capital market on Tuesday as they purchased shares worth Rs 1,376.84 crore, as per exchange data.

After turning net buyers last month, foreign investors have continued to invest in Indian equities and pumped in Rs 22,452 crore in the first two weeks of August.

The wholesale price-based inflation eased to a five-month low of 13.93 per cent in July on easing prices of food articles and manufactured products.

"The Indian rupee is well supported following lower crude oil prices and foreign fund inflows. However, traders are cautious ahead of FOMC minutes and expect corporate dollar outflows in the coming day which could limit the upside in the rupee," said Dilip Parmar, Research Analyst, HDFC Securities.

In the near term, spot USD-INR is expected to consolidate in the range of 79.10 to 79.85, he added.

"The Indian rupee has edged higher amid a 'risk on' mood and splendid gains witnessed in the domestic equities. After almost nine months of incessant outflows, domestic equities are seeing net inflows since July. Besides, the decline in crude oil prices has eased concerns about elevated inflation, further supporting the domestic currency," said Sugandha Sachdeva, vice-president - commodity and currency Research, Religare Broking Ltd.

However, a retreat in the dollar index from a six-week low tested last week is still acting as a key headwind for the local unit and restricting gains beyond the 79.20 mark. The dollar index hit a low of 104.63 last week amid softening of inflation in the US, which eased bets of another large rate hike at the Fed's September meeting, Sachdeva added.

"Markets are now eyeing the minutes of the Fed's July meeting for further cues about the monetary policy path of the US central bank... We envisage the rupee to trade in the 79.20-80.10 range in the coming days," he noted. 

With PTI inputs