Rupee rises 5 paise to 82.86 against US dollar

Mumbai: The rupee appreciated 5 paise to settle at 82.86 (provisional) against the US dollar on Wednesday, supported by a weak American currency against major rivals overseas.

However, foreign capital outflows and surging crude prices in the international markets capped the positive bias in the rupee, forex analysts said. Investors were trading cautiously ahead of the US inflation data and RBI's monetary policy decision to be released on Thursday. The Reserve Bank's rate-setting panel MPC started its three-day review meeting on Tuesday. At the interbank foreign exchange, the domestic unit opened stronger at 82.83 and finally settled at 82.86 (provisional) against the dollar, registering a gain of 5 paise over its previous close. During intra-day, the local unit touched the peak of 82.80 and hit a low of 82.86 against the greenback. On Tuesday, the rupee had settled at a more than 8-month low level of 82.91 against the dollar.

"Indian rupee traded with a slight positive bias on Wednesday on some softening of the US dollar today. However, a surge in crude oil prices and weak domestic markets capped sharp gains," said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas. He said the US dollar rose on Tuesday after Moody's downgraded credit ratings on several small to mid-sized US banks and warned of a downgrade to others. "This led to a safe-haven appeal for the US dollar. China's CPI declined to 0.3 per cent, posting its first year-on-year decline since February 2021." Choudhary said the rupee is expected to trade with a negative bias on risk aversion in global markets and selling pressure from FIIs. "However, some softness in the US dollar may support the rupee at lower levels."

"Traders may trim their positions ahead of RBI's monetary policy decision tomorrow. Markets expect RBI to maintain the status quo and keep the repo rate unchanged at 6.5 per cent. We expect the USD/INR spot to trade in the range of 82.40 to 83.30 in the near term," he added. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.11 per cent to 102.42. Global oil benchmark Brent crude surged 0.75 per cent to USD 86.82 per barrel. On the domestic equity market front, the 30-share BSE Sensex closed 149.31 points or 0.23 per cent higher at 65,995.81. The broader NSE Nifty advanced 61.70 points or 0.32 per cent to close at 19,632.55. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 711.34 crore, according to exchange data.