Rupee Depreciates To 73.09 Against Dollar Amid Muted Domestic Equities

Rupee extended losses for the third straight session, depreciating 19 paise against the US dollar on Wednesday, June 2, to settle at 73.09 tracking muted domestic equities and stronger American currency.  At the interbank foreign exchange market, the domestic unit opened on a negative note at 73.13, against the previous close of 72.90, against the dollar, and swung between 73.04 to 73.30 throughout the session. In an early trade session, the local unit declined 26 paise to 73.16 against the greenback.

The domestic unit has lost 64 paise in the three trading sessions to Wednesday. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, gained 0.35 per cent to 90.14. 

''Rupee made a depreciated start at 73.0850 as demand for dollars increased due to CNH depreciating towards 6.40 after making a high of 6.34. With NFPR and monetary policy on Friday we are not expecting a big depreciation beyond 73.50 but it will all depend on the demand of $ which seems to be high at the moment. Exporters may sell near to 73.25 while importers may buy near to 72.90 during the day,'' said Mr. Anil Kumar Bhansali, Head of Treasury - Finrex Treasury Advisors.

''The currency pair opened lower today at 72.54 in anticipation of foreign fund inflows, but rumors of PSU Bank intervention raised the currency pair above 72.70 at this time. India's foreign exchange reserves increased by $ 2.9 billion to $ 592 billion in the week ending May 21, an all-time high after reaching $ 590 billion in January 2021. The strong net capital inflows resulted in a significant increase in foreign exchange reserves,'' said Kshitij Purohit, Lead Currency & Commodities at CapitalVia Global Research Limited.

“The fx market is appreciating ahead of the US NFP data for a steer on the US outlook. A surge in payrolls growth will be seen as a sign that the Fed is more likely to move towards early rate hike in the future. The USD/INR spot did not have a good month of May, despite favourable seasonality conditions. However, from 72.30-72.50 zone dollar bulls have been active, but broadly risk still remains tilted to downside in USDINR spot,'' said Mr. Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.

Market participants remained vigilant ahead of the Reserve Bank of India monetary policy meeting scheduled to be announced on Friday, June 4.  On the domestic equity market front, the BSE Sensex ended 85.40 points, or 0.16 per cent lower at 51,849.48, while the broader NSE Nifty climbed 1.35 points or 0.01 per cent to close at 15,576.20.  

''Markets ended at almost unchanged levels in a lacklustre trade, but it seems that a corrective pattern has been completed. The 15460 level would act as significant support for Nifty and Sensex if it breaks the level it could fall to 15430/15330. The index would have closed below 15500 today if not for gains in banks and auto Sectors. Index giant Reliance was also the top performer and could close above Rs 2200 after 60 days,'' said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. 

 ''Nifty gave monthly closing at ATH levels and continues to trade around the same. We believe the undertone of the markets remain positive and expect positive bias to continue. Short-term indicators suggest some consolidation and we await impulsive parameters to trigger...Pharma, Metals, and FMCG stocks are in the momentum value zone while Banking stocks remain elevated from the short-term perspective,'' said Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities.

According to exchange data, the foreign institutional investors were net sellers in the capital market on June 1 as they offloaded shares worth Rs 449.86 crore. Brent crude futures, the global oil benchmark, rose 1.12 per cent to $ 71.04 per barrel.