Rupee advances 9 paise to 74.28 as crude cools off

The rupee pared initial losses to settle 9 paise higher at 74.28 against the US dollar on Wednesday on lower crude oil prices.

A strong dollar in overseas markets and losses in equity markets capped gains in the local currency.

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At the interbank forex market, the local unit opened on a weak note at 74.51 against the greenback. The unit rebounded from the lows later to settle at 74.28, higher by 9 paise over its previous close of 74.37.

"Rupee witnessed volatile moves as selloff witnessed in all currencies except the dollar. Even after a strong rally in the dollar index rupee maintained gains as crude prices cooled off yet again giving support to the rupee. Gaining ahead, rupee can be seen in range 74.20-74.55," said Jateen Trivedi, Senior Research Analyst at LKP Securities.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee recovered from earlier losses and ended stronger supported by fund flows and dollar sales.

The rupee was also aided by weak crude oil prices which fell on Wednesday in Asian and European trading session after an industry report showed that US gasoline stocks dropped more than expected last week, increasing pressure on the Biden administration to release oil from emergency reserves to cap soaring fuel prices.

Earlier in the day, however, the rupee depreciated to an intraday low of to 74.51 on the back of stronger dollar.

Most Asian currencies were stronger this Wednesday's trade, and aided sentiments, Iyer added.

According to Emkay Global Financial Services, there are no fresh triggers in the forex market and the USDINR spot is stuck within a tight range of 74.20-74.55.

"It is a truncated week, with inflation playing a major hindrance to the risk appetite. So, the only focus remains on whether Fed members' express their worry over inflation, supporting the uptrend in DXY. But overall we expect the spot to continue trading in between 74-74.65," it said.

On the domestic equity market front, the BSE Sensex ended 314.04 points or 0.52 per cent lower at 60,008.33, while the broader NSE Nifty declined 100.55 points or 0.56 per cent at 17,898.65.

Brent crude futures, the global oil benchmark, fell 0.87 per cent to USD 81.71 per barrel.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.03 per cent at 95.94.

Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 560.67 crore, according to exchange data.