Rupee snaps 3-day winning streak, drops 13 paise to 73.18/USD

Mumbai: Snapping its three-day winning run, the rupee on Wednesday declined by 13 paise to close at 73.18 against the US dollar in line fall in Asian currencies ahead of the release of US Fed minutes.
Dollar demand from importers and weak regional risk appetite and losses in the domestic equities also weighed on the local unit.
At the interbank foreign exchange market, the domestic currency opened at 73.02 against the American currency, but pared the gains to close at 73.18, registering a decline of 13 paise over its previous close.
During the session, the local unit hit an intra-day high of 72.93 and a low of 73.18. On Tuesday, the rupee had closed at 73.05 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.20 per cent to 89.93.
“The Indian rupee has seen a significant rise in the past few sessions amid a strong rally in global equity markets and a softer dollar index. However, it has pared gains today as the risk sentiment has weakened on concerns over the new virus strain in the Asia Pacific region, which could hamper growth,” said Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking.
Sachdeva noted that a possibility of an earlier-than-expected rate hike by the Fed has led to some risk-off. “Markets will be eyeing today’s Fed minutes for further cues,” Sachdeva said.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee depreciated for the first time in four sessions against the US dollar this Wednesday, weighed down by importers’ dollar demand and a weak regional risk appetite.
Asian currencies weakened, while equities declined ahead of the Fed’s April minutes, Iyer added.
On the domestic equity market front, the BSE Sensex ended 290.69 points or 0.58 per cent lower at 49,902.64, while the broader NSE Nifty declined 77.95 points or 0.52 per cent to 15,030.15.
Foreign institutional investors (FIIs) were net buyers in the capital markets, as they purchased shares worth Rs 618.49 crore on Tuesday, as per provisional data.
Brent crude futures, the global oil benchmark, fell 1.95 per cent to USD 67.37 per barrel.
Meanwhile, India saw record 4,529 fatalities due to coronavirus in a single day pushing the COVID-19 death toll to 2,83,248, while 2,67,334 fresh infections were recorded taking the total tally of cases to 2,54,96,330, according to the Union Health Ministry data updated on Wednesday.
Dilip Parmar, Research Analyst, HDFC Securities said that dollar buying has been seen from banks on behalf of the central bank and importers around 73 odd levels.
With the Fed in no rush to respond to rising prices and the expected rebound global growth benefiting cyclical Asian currencies, the outlook for dollar does not look bright, he noted.
“The COVID cases are moderating in India and Fed’s music will remain the same, so chances of USDINR bouncing are very low. Still traders are awaiting tonight’s Fed minutes for the clues about the outlook,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.


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