Rupee tumbles 16 paise to 73.03 against US dollar
However, we see that rupee depreciation could be short-lived given the RBIs aim to keep the rupee stronger with a view to control imported inflation. The appreciation limit could largely depend on where the RBI says enough is enough and the overall performance of the US dollar, said Sriram Iyer, Senior Research Analyst, Reliance Securities.
The rupee depreciated 16 paise to close at 73.03 against the US dollar on Wednesday amid a strengthening greenback overseas.
At the interbank forex market, the rupee opened on a weak note at 73.10, and touched an intra-day high of 72.90 and a low of 73.13 against the American currency.
It finally finished at 73.03, down 16 paise over its previous close.
On Tuesday, the rupee had rallied 73 paise to breach the 73-mark against the US dollar, closing at 72.87.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.26 per cent to 92.58.
On the domestic equity market front, the 30-share BSE benchmark Sensex rose 185.23 points or 0.48 per cent to end at 39,086.03. The NSE Nifty climbed 64.75 points or 0.56 per cent to 11,535.
Foreign institutional investors were net buyers in the capital markets as they purchased shares worth Rs 486.09 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.88 per cent to USD 45.98 per barrel.
Forex traders said the dollar index bounced after the Institute for Supply Management (ISM) manufacturing PMI data surprised on the upside for August.
"Indian rupee ended with modest losses in today's session after ending at a six-month high on Tuesday. The dollar index surged after better than expected ISM number and long unwinding in the crowded euro trade," said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.
Vakil further said the Indian rupee expected to trade with positive bias following dollar inflows and the RBI staying away from intervention.
"Technically, spot USD-INR is having support at 72.40," he added.
While upbeat manufacturing activity data from the US led to a strong rebound in the dollar index, Asian currencies were weak against the US dollar, which weighed on sentiment, traders said.
cccDownside 72.56-72.44 will hold a strong support and upside resistance is around 73.22-73.40 level. USD-INR spot pair is expected to trade in a range of 72.70-73.28 levels," Iyer said.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, "in today's Asian session dollar rose against its major crosses and focus for the day will be on private payrolls that will be released from the US. We expect USD-INR (Spot) to quote in the range of 72.70 and 73.20."
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