Rupee vs Dollar: Domestic currency recovers 7 paise to close at 83.33 against American dollar as rate hike fear eases

Currency market update: The rupee (INR) recovered from all-time lows on Thursday, December 14, and settled at 83.33 against the US dollar. The Indian currency gained 7 paise for the day from its previous close as the greenback weakened in the overseas markets following signals that rate hikes by the US Federal Reserve were over. The local unit moved within a tight range of 83.27-83.35 throughout the session.

At the interbank foreign exchange, the rupee began the day at 83.30 against the last close of 83.40, the lowest closing level against the US dollar. The domestic currency fell to as low as 83.35 during the session before settling at 83.33 (provisional) against the greenback for the day.

A stellar rally in domestic equities fuelled by foreign fund inflows also boosted the rupee sentiment. However, dollar buying by state-run banks and a rise in oil prices capped the rupee gains, forex traders said.

The dollar index — which measures the value of the American currency against six peers other than the rupee — was last seen trading 0.32 per cent lower at 102.54.

The US Federal Reserve kept its key interest rate unchanged on Wednesday for a third time in a row. The officials also signalled that they expect to make three quarter-point cuts to their benchmark rate next year.

"The crash in the US 10-year yield to 4 per cent will trigger large capital flows to India. The main beneficiaries will be the large caps, particularly the fairly valued large caps in banking. IT too is likely to attract buying," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.

Global oil benchmark Brent crude futures rose 2.11 per cent to USD 75.83 per barrel at the last count.

Similarly, domestic equity benchmarks Nifty50 and Sensex advanced. The 30-share benchmark BSE Sensex jumped 929.60 points to settle at an all-time high of 70,514.20 while the 50-issue Nifty climbed 256.35 points to settle at a record of 21,182.70.

According to exchange data, foreign institutional investors (FIIs) were net buyers in the capital market on Wednesday as they bought shares worth Rs 4,710.86 crore.

With inputs from PTI