Rupee pares initial gains to settle flat at 74.83 against US dollar

Mumbai: The rupee pared its initial gains to settle on flat note at 74.83 against US currency on Wednesday due to dollar demand from foreign banks.
Forex traders said higher-than-expected borrowing in the next financial year and weak fiscal deficit projections from the government weighed on investor sentiment.
At the interbank foreign exchange, the rupee opened at 74.76 against the American dollar, and later witnessed an intra-day high of 74.71 and a low of 75.02 against the greenback.
The local unit finally ended the day at 74.83, down 1 paisa from the previous close of 74.82.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the rupee had opened stronger at 74.76 but erased early gains to fall to the day’s low of 75.02 on dollar bids by foreign banks.
Meanwhile, risk appetite in the region improved, while the domestic equity markets continued to extend gains. Most emerging market and Asian peers were stronger on Wednesday and capped depreciation bias of the domestic unit.
The US dollar fell this Wednesday evening in Asian trade as Federal Reserve officials pushed back against aggressive rate hikes this year, lifting risk appetite.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was down 0.31 per cent at 96.09.
“High domestic bond yields and elevated oil prices are threats to the rupee. Over the near term we expect a broad range of 74.40 and 75.10 on spot,” said Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.
According to Emkay Global Financial Services, the US dollar index retraced as the Philadelphia Fed President Patrick Harker said that he is less convinced of a 50 bps rate hike if inflation numbers start to come down in the near future.
Moreover, Brent crude oil prices continued to sustain around its 7-year highs following the tensions between Russia & Ukraine, it added. Global oil benchmark Brent crude futures fell 0.30 per cent to USD 88.89 per barrel on Wednesday.
On the domestic equity market front, the 30-share Sensex ended 695.76 points or 1.18 per cent higher at 59,558.33, while the broader NSE Nifty settled up 203.15 points or 1.16 per cent to 17,780.00.
Foreign institutional investors were net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 21.79 crore, as per stock exchange data.
According to provisional data of the commerce ministry, the country’s exports rose by 23.69 per cent to USD 34.06 billion in January, on healthy performance by engineering, petroleum and gems and jewellery segments even as the trade deficit widened to USD 17.94 billion during the month.

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