Rupee edges up 1 paisa to 83.50 against US dollar

Mumbai, May 15 (PTI) The rupee inched up 1 paisa to settle at 83.50 (provisional) against the US dollar on Wednesday as the American currency retreated from its elevated level.

However, sustained foreign fund outflows and a weak trend in domestic equities weighed on the local unit.

With foreign investors buying US dollars and the Reserve Bank of India (RBI) selling the greenback, the USD/INR pair is expected to remain range-bound with a bit of a weakness bias, according to forex traders.

At the interbank foreign exchange market, the local unit opened at 83.49. During the session, it traded in a narrow range of 83.51-83.47. The domestic unit finally settled at 83.50 (provisional), higher by 1 paisa from its previous close.

The rupee gained on weakness in the US Dollar. However, weak domestic markets and FII selling capped sharp gains, said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

“We expect the rupee to trade with a slight negative bias on the weak US Dollar and expectations that the US Dollar may rise again if inflation remains sticky and retail sales jumps,” Choudhary said, adding that FII outflows and a rise in crude oil prices may also weigh on the rupee.

Traders may take cues from India’s trade balance data and CPI and retail sales data from the US. USDINR spot price is expected to trade in a range of Rs 83.30 to Rs 83.80, Choudhary said.

India’s merchandise exports in April 2024 marginally rose to USD 34.99 billion from USD 34.62 billion in the year-ago month, according to government data released on Wednesday.

Imports too increased to USD 54.09 billion from USD 49.06 billion in April 2023. The trade deficit, or the gap between imports and exports, during the month stood at USD 19.1 billion.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 104.85, lower by 0.15 per cent, as Fed Chair, Jerome Powell dismissed the hot PPI data as not so hot after March’s reading was revised lower.

Brent crude futures, the global oil benchmark, rose 0.18 per cent to USD 82.53 per barrel.

On the domestic equity market, the 30-share BSE Sensex declined 117.58 points, or 0.16 per cent, to close at 72,987.03 points. The broader NSE Nifty settled 17.30 points, or 0.08 per cent lower, at 22,200.55 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 4,065.52 crore, according to exchange data.

On the macroeconomic front, wholesale inflation rose to a 13-month high of 1.26 per cent in April fuelled by rising prices of food articles, especially vegetables, amid expectations of RBI holding interest rates in the policy review next month.

Meanwhile, Moody’s Ratings on Tuesday said the Indian economy is projected to expand 6.6 per cent in the current fiscal year and said strong credit demand fuelled by robust economic growth will support the NBFC sector’s profitability.