Rupee recovers 11 paise to close at 82.49 against dollar on easing inflation concerns

The rupee gained 11 paise to settle at 82.49 against the US dollar on Wednesday as a positive trend in domestic equities and easing inflationary pressures strengthened investor sentiment.

Besides, a weak greenback against its major rivals overseas and softening crude oil prices supported the domestic unit, forex traders said.

At the interbank forex market, the local unit opened flat at 82.60 against the greenback and witnessed an intra-day high of 82.40 and a low of 82.71.

It finally ended at 82.49 against the American currency, registering a rise of 11 paise over its previous close of 82.60.

''The Indian rupee recouped this week's loss after the dollar retreated overnight following ease in inflation. The expectation of corporate dollar inflows and risk-on sentiments supported the local unit.

''The focus now shifts to Fed's policy decision later tonight. The money market is pricing in a 50bps hike tonight, but traders will eye on a dot plot, with a revision likely to take the median to 4.875 per cent,'' Dilip Parmar, Research Analyst, HDFC Securities, said.

''Rupee opened higher after inflation in the US receded. Data showed inflation fell to 7.1 per cent in November down from 7.7 per cent in the previous month. The dollar fell sharply against its major crosses after the release of the data,'' said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Apart from Fed, the ECB and the BoE will also release their policy on Thursday and that is likely to trigger further volatility for the dollar, Somaiya said , adding that he expects the USD/INR (Spot) to trade sideways and quote in the range of 82.20 and 83.05.

''Indian Rupee appreciated by 0.40 per cent on Wednesday on improved global risk sentiments amid weak US Dollar and positive domestic stock markets. FII inflows also supported Rupee. US Dollar fell to a 6-month low as US CPI inflation declined to 7.1 per cent year-on-year in November, below expectations of 7.3 per cent while core CPI inflation declined to 6 per cent below estimates of 6.1 per cent,'' Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas, said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.28 per cent to 103.69.

On the domestic equity market front, the BSE Sensex ended 144.61 points or 0.23 per cent higher at 62,677.91, while the broader NSE Nifty advanced 52.30 points or 0.28 per cent to 18,660.30.

Brent crude futures, the global oil benchmark, slipped 0.26 per cent to USD 80.47 per barrel.

The US inflation for November was recorded at 7.1 per cent annually against an annual gain of 7.7 per cent in October, triggering hopes that the US Federal Reserve might be less hawkish in raising interest rates.

The Fed is widely expected to raise its benchmark rate by 0.50 percentage points on Wednesday.

Meanwhile, retail inflation in India dipped below the RBI's upper tolerance level of 6 per cent for the first time in 11 months in November as softening prices of food items brought relief, but the central bank may wait for more data before pausing hikes in interest rates.

Foreign institutional investors (FIIs) were net buyers in capital markets on Wednesday as they bought shares worth Rs 372.16 crore, according to exchange data.