Rupee recovers 9 paise to end at 74.38, snaps 2-day losing run

The rupee recovered by 9 paise to close at 74.38 against the US currency on Wednesday, snapping its two-day losing run ahead of the US Fed policy decision.

Forex traders said the rupee is trading in a narrow range this week ahead of the monthly expiry and the US Fed's policy decision. At the interbank foreign exchange market, the local unit opened at 74.44 against the dollar and witnessed an intra-day high of 74.31 and a low of 74.49 during the session. The local unit finally ended at 74.38, higher by 9 paise over its last close. On Tuesday, the rupee had settled at 74.47 against the US dollar. The rupee dropped by 7 paise in the two straight sessions to Tuesday.

''Indian rupee appreciated after two days of minor weakness amid month-end adjustments,'' said Dilip Parmar, Research Analyst, HDFC Securities.

So far this week, the rupee has been consolidating in the range of 74.30 to 74.50, looking for a fresh trigger to get a clear direction. Investors' focus remained on the Federal Open Market Committee (FOMC) meet whose outcome will come mid-night, Parmar said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.07 per cent to 92.49.

''The rupee appreciated against the US currency on dollar sales by foreign banks, while inflows from initial public offerings also aided gains,'' said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The US dollar was trading with marginal gains as investors refrained from placing major bets ahead of the outcome of a US Federal Reserve policy later in the day.

''The Federal Reserve's policy outcome could potentially offer clues on how long monetary policy can stay accommodative,'' Iyer said.

There is also the possibility that the Fed meeting could be a non-event with the central bank making no major change in the wording or tone of the policy statement and could continue to overlook inflation and focus on economic recovery, he added.

According to Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee continued to consolidate in a narrow range despite sharp sell-off in domestic and global equities.

''Most Asian indices were under pressure and that also disturbed the overall market sentiment. Rupee seemed to be very resilient to the volatility in other Asian currencies and traded in a narrow range. Market participants remained cautious ahead of the important FOMC policy statement that is scheduled to be released today,'' Somaiyaa said.

He further added that ''expectation is that the central bank could hold a dovish stance and could restrict major upside for the dollar. We expect the USDINR (Spot) to trade with a negative bias and quote in the range of 74.20 and 74.80.'' On the domestic equity market front, the BSE Sensex ended 135.05 points or 0.26 per cent lower at 52,443.71, while the broader NSE Nifty declined 37.05 points or 0.24 per cent to 15,709.40.

Global oil benchmark Brent crude advanced 0.77 per cent to USD 75.05 per barrel in futures trade.

Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,459.08 crore, as per exchange data.