The rupee surged by 33 paise to close at 68.41 against the U.S. dollar on Wednesday amid the greenback’s weakness against key rivals overseas, even as oil prices firmed up on supply concerns.
This is the third straight session of gain for the domestic currency, during which it has strengthened by 89 paise.
At the Interbank Foreign Exchange, the rupee opened at 68.72 per dollar and advanced to a high of 68.37 during the day. It finally settled at 68.41, up 33 paise against its previous close of 68.74.
Heavy foreign fund outflows, rising crude oil prices and selling in domestic equities capped the gains for the rupee, Forex dealers said.
“Oil prices rose for a fourth day, pushing Brent towards a nearly five-month high of $70 a barrel as support from OPEC-led supply cuts and U.S. sanctions overshadowed a report showing an unexpected rise in U.S. inventories,” said V.K. Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out ₹1,040.48 crore on Wednesday, as per the provisional data.
Brent crude futures, the global oil benchmark, rose 0.48% to trade at $69.70 per barrel amid OPEC-led supply cuts.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, tripped 0.37% to 97.00.
Forex traders noted that the RBI is likely to adopt a dovish policy stance on Thursday, which could restrict significant appreciation for the rupee. Below-normal monsoon forecast by private firm Skymet could also weigh on the domestic unit, they added.
Snapping their four-session rising streak, benchmark indices closed in the red on Wednesday as investors took money off the table following forecast of below-normal monsoon this year.
The 30-share Sensex settled 179.53 points, or 0.46% lower at 38,877.12, while, the broader NSE Nifty too pared early gains and ended 69.25 points, or 0.59%, down at 11,643.95.
Meanwhile, Financial Benchmark India Private Ltd. (FBIL) set the reference rate for the rupee/dollar at 68.4896 and for rupee/euro at 76.8800. The reference rate for rupee/British pound was fixed at 90.0204 and for rupee/100 Japanese yen at 61.45.