Rupee pares gains to close 11 paise down on dollar buying by banks, importers

New Delhi, Jun 3 (PTI) The rupee surrendered its intra-day gains to close 11 paise lower at 75.47 against the US currency on Wednesday due to dollar buying by banks and oil importers.

Forex traders said suspected RBI intervention to curb volatility checked sharp gains in the local unit which had surged to a high of 75.04 in early trade amid gains in equity markets.

Sustained foreign fund flows, the revival of business activities and weak US dollar supported the local unit, but there are some risks, including US-China trade tiff and concerns that it may jeopardise the Phase-1 deal, they said.

At the interbank forex market, the rupee opened strong at 75.04, but later pared gains to hit a low of 75.52. It finally settled at 75.47 against the US dollar, down 11 paise over its last close of 75.36.

'Rupee ended lower on Wednesday as likely dollar buying by nationalised banks, on behalf of the Reserve Bank of India (RBI), which intervened to curb sharp volatility in the spot pair.

'Also some oil bids further aided dollar demand, RBI was seen intervening around Rs 75.36 level and PSBs were buying dollars mostly on behalf of the apex bank,' said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.23 per cent to 97.44.

'Now investors have started focusing on the prospect that economies are re-opening all over the world from the pandemic. Thus, the risk sentiment has turned positive and the dollar index is subdued amongst major emerging market currencies,' said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.

Gupta further said that despite strong inflows into equity, USD/INR spot was unable to break the crucial support of 75, and it reversed towards 75.40. “The immediate resistance lies around 75.60.' Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said in the next couple of sessions market participants will be keeping an eye on the global events importantly unemployment numbers from the US.

'Private payrolls number will be released on Wednesday and non-farm payrolls number will be released on Friday; weaker-than-expected employment number could keep the dollar weighed down against its major crosses. We expect the rupee (Spot) to quote in the range of 75.20 and 75.80,' he said.

On the equities front, the 30-share index ended 284.01 points or 0.84 per cent higher at 34,109.54. The NSE Nifty jumped 82.45 points or 0.83 per cent to 10,061.55.

Foreign institutional investors were net buyers in the capital market, as they bought equity shares worth Rs 7,498.29 crore on Tuesday, according to provisional exchange data.

Brent crude futures fell 1.01 per cent to USD 39.17 per barrel.

Meanwhile, in India, the death toll due to COVID-19 rose to 5,815 and the number of infections rose to 2,07,615, according to the health ministry.

The number of cases around the world linked to the disease has crossed 63.99 lakh and the death toll has topped 3.80 lakh.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.5871 and for rupee/euro at 84.1133. The reference rate for rupee/British pound was fixed at 94.6381 and for rupee/100 Japanese yen at 70.16. PTI DRR MR MR