Currency Market News: Rupee halts two-day fall, ends 7 paise higher at 85.80 vs dollar

Rupee snapped its two-day losing streak and ended 7 paise higher at 85.80 (provisional) against the US dollar on Thursday, supported by strong domestic equities and gains in Asian currencies. 

According to forex traders, a drop in global crude oil prices overnight lent support to the local unit, although a strong US dollar index capped any sharp appreciation.

The trading session was marked by volatility as the rupee opened at 85.86 and moved in a narrow range between a high of 85.67 and a low of 85.96 against the greenback. Eventually, it settled in positive territory, recovering from earlier losses.

This came a day after the rupee had depreciated for a second straight session, ending 26 paise lower at 85.87 on Wednesday.

Market sentiment remains cautious as investors await the outcome of the Reserve Bank of India’s (RBI’s) monetary policy meeting. The central bank’s rate-setting panel began its three-day deliberation on Wednesday, with the decision expected on Friday. 

Also Read: Currency Market News: Rupee slips 9 paise to 85.96 vs dollar; all eyes on RBI policy outcome 

“We expect the rupee to trade with a negative bias on positive tone in the US dollar and elevated crude oil prices. Ongoing trade tensions between US and China and geo-political tensions between Ukraine and Russia may also pressure the rupee. However, any fresh FII inflow may support the rupee at lower levels. Traders may take cues from weekly unemployment claims and trade balance data from the US. Investors may remain cautious ahead of RBI’s monetary policy meeting decision on Friday,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

Analysts are anticipating a 25 bps rate cut from the RBI, while also keeping an eye on the upcoming US non-farm payrolls report. “USDINR spot price is expected to trade in a range of Rs 85.40-86.25,” Choudhary added.

Meanwhile, the US dollar index, which measures the greenback’s strength against a basket of six currencies, was trading 0.06 per cent higher at 98.85. Brent crude, the global oil benchmark, was up 0.31 per cent at USD 65.05 per barrel in futures trade.

Also Read: Final Trade: Sensex closes 444 pts higher, Nifty ends at 24,751; pharma, metal, realty shares rally

Stock market summary

On the domestic front, the equity markets ended on a strong note. The BSE Sensex surged 443.79 points or 0.55 per cent to close at 81,442.04, while the NSE Nifty gained 130.70 points or 0.53 per cent to settle at 24,750.90. Foreign institutional investors (FIIs) were net buyers on Wednesday, purchasing equities worth Rs 1,076.18 crore, as per exchange data.

(With inputs from PTI)