Rupee may trade in the range of 73.90 to 74.40 in the next few sessions.
The rupee on Wednesday closed 8 paise lower at 74.14 against the US dollar amid a softening in domestic equity markets and strengthening of the US currency in the overseas market.
At the interbank forex market, the local currency opened at 74.18 and saw intra-day highs of 74.08 and 74.26 lows against the US dollar in the day’s trade.
The local unit finally closed at $74.14 per dollar, which is 8 paise lower than the previous close. On Tuesday, the rupee had closed at 74.06 against the greenback.
“The Indian rupee devalued amid a strong dollar and sluggish domestic markets. The dollar strengthened on the back of a jump in US Treasury yields. Yields are rising on hopes that the US Federal Reserve will start reducing its bond purchases before the end of the year. and probably start raising interest rates next year,” said Raj Deepak Singh, Head-Derivatives – ICICI Securities.
The jump in commodity prices has also fueled concerns over short-term inflationary pressures.
Moreover, investors remained cautious ahead of speeches by major central banks around the world to get an indication on the future monetary stance.
“The sharp fall was restrained on continued FII inflows and the rupee may trade in the range of 73.90 to 74.40 in the next few sessions as crude oil slides below higher levels,” Mr Singh said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06% higher at 93.82. Meanwhile, global oil benchmark Brent crude futures fell 0.61% to $78.61 per barrel.
On the domestic equity market front, the BSE Sensex closed 254.33 points or 0.43% lower at 59,413.27, while the broader NSE Nifty fell 37.30 points or 0.21% to 17,711.30.
Meanwhile, foreign institutional investors were net sellers in the capital markets on Tuesday as they sold shares worth Rs 1,957.70 crore, according to exchange data.
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