The rupee gained nine paise against the US dollar on Thursday, July 29, to settle at 74.29 (provisional), driven by positive domestic equities and weaker American currency. At the interbank foreign exchange market, the domestic unit opened at 74.32 against the dollar and registered an intra-day high of 74.22 - rising to its highest level in three weeks. It witnessed a low of 74.34. In an early trade session, the local unit rose seven paise to 74.31 against the greenback. The rupee ended at 74.29 against the dollar, registering a rise of nine paise over its previous close.
On Wednesday, July 28, the domestic unit settled at 74.38 against the greenback. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.30 per cent to 92.04.
Rupee Hits Its Highest Level In 3 Weeks:
During the trading session today, the rupee strengthened to its highest level in more than three weeks against the American currency as the U.S. Federal Reserve's dovish stance resulted in dragging the greenback. Gains in domestic equities also contributed to the rise in rupee's performance. The local unit touched 74.22-74.23 - its strongest since July 6.
The American currency declined to multi-week lows in Asian trading after fresh reassurance that the U.S. interest rate hikes are distant and as riskier currencies drew support from China's efforts to soothe the stock market jitters. Most of the Asian currencies traded stronger against the dollar.
What analysts say:
Mr Amit Pabari, MD, CR Forex:
''On the domestic front, the cabinet has announced the enactment of the Deposit Insurance Credit Guarantee Corporation (DICGC) Bill, which would ensure an amount of Rs 5 lakh stored in bank accounts. They have also announced amendments to LLP laws to provide ease of doing business benefits to the new ventures.
However, clouds are still hovering on the domestic outlook due to many headwinds in business activity. Overall, the outlook on the USDINR pair remains the same. So, it is likely to continue its short-term range of 74.30-75.00 until another major event gives a breakout on the higher side.
Kshitij Purohit, Lead International & Commodities at CapitalVia Global Research Limited:
During early Wednesday, the USD/INR was pushed at 74.45, down 0.16 per cent in intraday. Despite negative drivers for India, the rupee (INR) pair consolidates the previous day's gains. The International Monetary Fund's (IMF) downward revision of the Asian nation's FY 2021 GDP predictions to 9.5 percent, down from 9.8 percent previously expected, has gotten a lot of press.
Aside from the IMF forecasts and headlines, the US-China squabbles and Beijing's crackdown on IT and education firms also weigh on market mood, not to mention the Fed's pre-Fed prudence in defending the US dollar against bears.
On the domestic front, USD/INR August opened slightly on a positive note and is moving in a “falling channel” candlestick chart pattern from past few sessions, due to which major trend remains to be bearish.
The technical view is supported by global cues as the markets around the world are either in a consolidation phase or are moving in bearish trend, the effect of this can be seen in the movement of Asian currencies.
On the contrary, buyers have to close above 74.8 in order to trigger a strong upside momentum.''
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 209.36 points or 0.40 per cent higher at 52,653.07, while the broader NSE Nifty climbed 69.05 points or 0.44 per cent to 15,778.45. The equity benchmarks snapped a three-day losing streak driven by strong buying interest in metal and PSU banking shares. The benchmarks showed a gap-up opening and held on to gains as futures and options contracts for July expired.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:
''On the monthly F&O expiry day, the market witnessed a smart pullback rally, although the July series has been volatile with a momentum of nearly 450 points. while the sectoral performance in the current month series was mixed with realty and metal indices gaining over 13 percent, auto and energy indices lost ground and shed nearly six percent.
The texture of the chart suggests that trading below 20 days would increase further weakness, while on the other side uptrend wave could continue up to 15900/53200 if indices succeed to trade above 15820/ 52700 levels.''
According to exchange data, the foreign institutional investors were net sellers in the capital market on July 28 as they offloaded shares worth Rs 2,274.77 crore, as per exchange data. Brent crude futures, the global oil benchmark, rose 0.39 per cent to USD 75.03 per barrel.