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Rupee rebounds from record low, up 10 paise to 77.34/USD

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Mumbai:  Snapping two days of sharp losses, the rupee appreciated 10 paise to end at 77.34 against the US dollar on Tuesday, supported by a rebound in regional currencies and fall in crude oil prices.

Forex traders said the RBI may have also intervened after the domestic unit plunged to its lifetime low in the previous session.

However, weak domestic equities and persistent foreign fund outflows restricted the gains, they added.

At the interbank forex market, the rupee opened strong at 77.27 against the greenback and moved in a range of 77.20 to 77.45. It finally ended at 77.34, up 10 paise from its previous close.

The rupee had slumped 54 paise to close at a record low of 77.44 against the US dollar on Monday.

“Rebound in risk assets and stronger regional currencies supported the rupee in today’s session. Some stabilisation in risk sentiment after a few days’ sell-off could help the local currency while rebound crude oil prices and fund outflows could adversely impact the rupee,” said Dilip Parmar, Research Analyst, HDFC Securities.

The backdrop of Fed tightening, growth concerns and an unstable risk environment augur well for the greenback. However, short-term profit booking cannot be ruled out in the dollar index, as it has been facing stiff resistance at around 104, he added.

On the domestic equity market front, the BSE Sensex ended 105.82 points or 0.19 per cent lower at 54,364.85, while the broader NSE Nifty fell 61.80 points or 0.38 per cent to 16,240.05.

Brent crude futures, the global oil benchmark, fell 1.15 per cent to USD 104.72 per barrel.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.03 per cent to 103.68.

Foreign institutional investors remained net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 3,960.59 crore, as per stock exchange data.

“Rupee consolidated in a narrow range after falling to fresh all time lows yesterday. Broader strength in the dollar against its major crosses kept the rupee weighed down,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

On the domestic front, focus will be on the CPI number and a higher number could cap gains for the currency, he noted.

“We suspect RBI may have intervened to keep rupee stable. Over the near term, USD/INR may remain range bound with an upward bias between 77 and 77.60 on spot,” said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities.

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