Extending losses for the second straight session, the rupee declined 17 paise against the US dollar on Tuesday, August 10, to settle at 74.43 amid a stronger American currency in the overseas markets. At the interbank foreign exchange market, the local unit opened on a negative note at 74.40 against the dollar, compared to its previous close of 74.26. The rupee registered an intra day high of 74.33 and an intra day low of 74.26 - its lowest level in almost two weeks. In an early trade session, the domestic unit fell 19 paise to 74.45 against the greenback, before closing at 74.43 for the day.
The domestic currency has lost 28 paise in the two trading sessions to Tuesday, August 10. According to forex traders, the foreign fund inflows and positive domestic equities helped in limiting the depreciation bias of the local unit. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.10 per cent to 93.04.
Rupee Falls To Its Lowest Level In 2 Weeks:
In line with other Asian currencies, the rupee weakened to its lowest level today in almost two weeks, tracking a broad dollar strength amid concerns that the U.S. Federal Reserve will taper its stimulus sooner than expected. During the trading session, the local unit touched a low of 74.4625 - its lowest level since July 28.
U.S Treasury yields rose overnight and pulled up the American currency after record-high job openings raised the prospects of the US Federal Reserve reducing bond-buying and tighten its COVID-driven stimulus.
What analysts say:
Mr Amit Pabari, MD, CR Forex:
''Investors now await U.S inflation data for July, due on Wednesday for further momentum in the dollar. A better than expected jobs data, lower unemployment rate, higher treasury yields, and prospects of Fed's tapering suggest that a strong dollar rally is on the cards.
USDINR took a sharp reversal in NDF from 74.26 to testing an important resistance of 74.50 levels. Risk aversion due to the double whammy of rising covid cases and new restrictions in China has been taking emerging markets on a toll.
However, with IPO flows remaining in full swing and oil prices tanking below $70 could provide rupee some support. Overall, for USDINR pair 74.40-74.50 remains a crucial resistance to determine the way forward for the rupee. Any sustainable move above 74.50 levels can push the rupee towards the 74.80-74.90 zone in the coming days.''
Kshitij Purohit, Lead International & Commodities at CapitalVia Global Research Limited:
''After a double punch of Reserve Bank of India (RBI) moves and the US jobs report, the Indian rupee (INR) pair soared the most in over a week on Friday. However, despite lackluster market mood, the pair bears return to the table.
Following the release of the US jobs report, the US Dollar Index (DXY) soared the most in 18 days. The recent good reports on the infrastructure investment plan, however, provide a challenge to the greenback bulls.
We can also see a “bearish trendline” that has already been respected twice in past sessions, so now again prices may test resistance around 74.55-74.57 zone. If this zone gets breached with enough volumes, we may see a continuation of bullish trend.''
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 151.81 points or 0.28 per cent higher at 54,554.66, while the broader NSE Nifty climbed 21.85 points or 0.13 per cent to close at 16,280.10. The benchmarks indices closed with marginal gains amid volatility, tracking the buying in heavyweights such as Bharti Airtel, HDFC, Infosys, Kotak Mahindra Bank, and Reliance Industries.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:
“Even as markets witnessed sharp volatility, benchmark Nifty surpassed intraday resistance of 16300. The sharp intraday correction from 16359 to 16202 clearly indicates uncertainty between bulls and bears. In the broader market, over 1500 stocks traded in the red, whereas about 265 stocks closed in positive which is broadly negative for the market.
Technically, on daily charts the Nifty has formed a Doji kind of formation which indicates strong possibility of intraday correction if the index succeeds to trade below 16180. We are of the view that as long as it's trading above 16180 the uptrend texture is bullish and likely to continue up to 16350. Further upside may also continue which could lift the index up to 16400.”
According to exchange data, the foreign institutional investors were net buyers in the capital market on August 9 as they purchased shares worth Rs 211.91 crore. Brent crude futures, the global oil benchmark, rose 0.98 per cent to $ 69.72 per barrel.