Rupee closes almost flat at 75.57 amid strong dollar

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 2,072.76 crore on Tuesday, according to provisional exchange data. "Rupee manages to end with minor gains even after weaker Asian peers following rebound in dollar index.

The rupee appreciated by one paisa to close at 73.57 against the US dollar on Wednesday as investors turned cautious amid weak domestic equities. At the interbank forex market, the rupee opened weak at 73.59 against the greenback and moved in a close range in the day trade. It finally settled 1 paisa higher at 73.57 against the US currency.

A strong dollar against major currencies overseas put pressure on the domestic unit, forex dealers said. "The US dollar continued its bullish momentum over the last few sessions supported by safe haven appeal for the currency amid risk-off sentiments in the markets and slightly upbeat data from the US," Sriram Iyer, Senior Research Analyst at Reliance Securities said. The dollar also gained after a second wave of coronavirus infections in Europe and Britain led to a subsequent decline in the non-dollar currencies like the Euro and the Sterling, Iyer added.

The dollar index, which gauges the greenback's strength against a basket of six currencies, climbed 0.18 per cent to 94.15. On the domestic equity market front, BSE benchmark Sensex was dropped by 65.66 points or 0.17 per cent to close at 37,668.42. The NSE Nifty shed 21.80 points or 0.20 per cent to close at 11,131.85.

Brent crude futures, the global oil benchmark, fell 0.19 per cent to USD 41.64 per barrel. "All this while, the pessimism over the US economic recovery compared to Europe was keeping the dollar index low. But now again the bets are rising for the dollar as there are fears of second lockdown in Europe and delay in the US fiscal stimulus and will reflect on USD/INR spot.

"Going ahead we may see USD/INR spot trading above 73.75. But the spot is not breaking the support zone of 73.20/73.25 and also the resistance of 73.75. There are slew of corporate inflows lined up in coming sessions, which may cap the upside in spot...," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services. Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 2,072.76 crore on Tuesday, according to provisional exchange data.

"Rupee manages to end with minor gains even after weaker Asian peers following rebound in dollar index. FTSE rebalancing related inflows has been seen in the market. Further expectation of foreign fund inflows from upcoming IPO also supported rupee. Going ahead market will keep an eye on dollar index, which is rebounding after fed's recent comments," Devarsh Vakil, Deputy Head Retail Research, HDFC Securities said. Asian currencies were broadly weaker, tracking the gains in the US Dollar. Market participants also await the borrowing calendar for the second half of the fiscal that may be announced by the end of this month, Iyer said.

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