Mumbai, Sep 16 (PTI) The rupee strengthened by 12 paise to settle at 73.52 against the US dollar on Wednesday supported by positive domestic equities and weak American currency.
At the interbank forex market, the local unit witnessed high volatility against the US dollar ahead of the US Federal Reserve's policy statement that will be released later in the day. During the session, the domestic unit touched an intra-day high of 73.48 and a low of 73.78 against the greenback.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 92.94.
'The Indo-China border skirmish is keeping the USD-INR spot afloat. Also, RBI is seen protecting the fall in spot. The USD-INR spot has not broken the crucial resistance of 73.75, on subdued dollar ahead of today's (Wednesday) US Fed outcome,' said Rahul Gupta, Head of Research - Currency, Emkay Global Financial Services.
Gupta further said that 'we don't expect any changes in tonight's monetary policy but the main focus will be on details over measures to boost economic growth. If Fed sounds less dovish than expected while providing details over average inflation targeting, then we can expect an uptick in dollar index and further rise in USD-INR spot'.
On the domestic equity market front, the 30-share BSE benchmark Sensex jumped 258.50 points or 0.66 per cent to close at 39,302.85. The broader NSE Nifty rose 82.75 points or 0.72 per cent to finish at 11,604.55.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,170.89 crore on a net basis on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 2.44 per cent to USD 41.52 per barrel.
'Market participants remained cautious ahead of the important FOMC policy statement that will be released today. Expectation is that the central bank could remain dovish and thereby keep gains in check for the greenback,' said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Traders said the dollar index is slightly softer ahead of the US Fed's policy decision.
'No policy changes are expected from the Fed and given Jerome Powell's recent speech at Jackson Hole, there should be relatively little for the statement or press conference to add. The mix of a better growth outlook and an indication for looser policy for longer should be modestly supportive of risk assets and keep USD softer today,' said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.
Vakil further noted that 'better than expected trade data and stronger Chinese currency supported emerging market currencies in today's trade. Rupee also added gains along with other Asian peers after yesterday’s underperformance'.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, 'the Indian rupee appreciated against the US Dollar supported by strong Asian cues and weak US Dollar ahead of the Fed monetary policy tonight'.
However, importer bids and state-run banks dollar buying for defence-related payments limited appreciation bias for the domestic unit, Iyer noted. PTI DRR MR