Mumbai: The rupee declined by 12 paise to close at 74.52 against the US currency on Thursday amid month-end dollar demand and foreign fund outflows from equity and debt markets.
At the interbank foreign exchange market, the local currency opened at 74.55 and witnessed a high of 74.47 and a low of 74.58 against the US dollar.
The local unit finally settled at 74.52, down 12 paise over its previous close. On Wednesday, the rupee had closed at 74.40.
“Rupee depreciated after two days of consolidation amid month-end dollar demand and foreign fund outflows from equities and debt markets,” said Dilip Parmar, Research Analyst, HDFC Securities.
Lacklustre price actions have been seen in the global forex market following the US holiday, while the rupee traded on the backfoot as month-end dollar demand and dollar outflows from equity and debt weighed, Parmar said.
Recovery in risk-on sentiments and series of IPOs lined up in coming months will limit the lower side in the event of stronger dollar index and crude oil prices. “Spot USD-INR is expected to trade in the range of 74 to 74.70,” Parmar noted.
“With US markets shut for the Thanksgiving holiday, volatility has been low. For the near-term, USDINR is expected to trade within a range of 74.30 and 74.75 levels,” said Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities.
Sriram Iyer, Senior Research Analyst at Reliance Securities, said the rupee depreciated after the FOMC minutes showed that Fed officials agreed to begin reducing its pandemic relief of USD 120 billion in monthly purchases with a timeline that would see them tapered completely by next June.
Asian currencies were mixed, while the dollar and the benchmark bond yield eased on Thursday in the European session and lent support. Additionally, weaker crude oil prices capped depreciation bias, Iyer noted.