Indian rupee erased some of the early losses but still trading lower at 73.43, amid selling seen in the domestic equity market.
It opened lower by 15 paise at 73.49 per dollar against previous close of 73.34.
The Sensex was down 484.04 points or 0.98% at 48677.77, and the Nifty was down 138.70 points or 0.93% at 14712.10.
Oil prices rose on Wednesday, extending overnight gains, after industry data showed a drop in US crude inventories, which reinforced OPEC’s robust demand outlook, and as the shutdown of the biggest US fuel pipeline headed into a sixth day.
The Indian rupee has remained fairly anchored in the past couple of days supported by strong gains in the domestic equities and softness in the American currency. Considering the poor jobs report for April, the Fed is not expected to dial back on its ultra easy monetary policy anytime soon. This is pressurizing the dollar index and leading to an appreciation in the local currency,” said Sugandha Sachdeva, VP- Commodity & Currency Research, Religare Broking.
“Going ahead, CPI data from the US shall be closely watched for any change in stance by the US Fed. However, the sharp spike in Covid cases in the country amid the second wave has once again raised uncertainty and is a big drag on the growth prospects.”
“S&P Global Ratings has already revised India’s GDP growth forecast to 9.8% from previous estimates of 11% for the FY 22. Considering the landscape, we envisage the rupee to face a hurdle around the key 73.20 mark. Only in case that is breached, further upside looks likely for the Indian rupee else the room is open for depreciation all over again,” she added.
Gold prices fell on Wednesday, as a rise in US Treasury yields and a firmer dollar dented the metal’s safe-haven appeal, while investors awaited US consumer price index data due later in the day.
A sell-off in the Dollar index and weakness in domestic equities pushed the rupee to remain flat for the day. However, writing activity increasing in USDINR Puts, we feel a bounce towards 74 levels cannot be ruled out, said ICICI Direct.
The dollar-rupee April contract on the NSE was at Rs 73.54 in the last session. The open interest rose almost 1.5% for the May series, it added.
