Rupee slips to 64.18 as Fed rate hike looms

PTI Feeds
Rupee slips to 64.18 as Fed rate hike looms

Mumbai, May 4 (PTI) The rupee snapped its two-day upmove against the US dollar and ended lower by a modest three paise at 64.18 on fresh demand spell for the American currency from importers and banks.

It moved in a tight range throughout the day amid uncertainty over the timing of an interest rate hike from the Federal Reserve. However, the dollar maintained most of its gains.

The local currency opened lower at 64.19 from Wednesday’s closing level of 64.15. It oscillated between 64.19 and 64.24 for most part before ending at 64.18, a loss of 3 paise, 0.05 per cent.

The rupee had appreciated 9 paise in last two trading session.

US central bankers stuck to their outlook for gradual monetary-policy tightening after they left interest rates unchanged overnight, as expected, but left open the prospect of raising them next month.

Continued capital outflow pressure also weighed on the currency market as foreign funds sold shares net worth Rs 517.74 crore yesterday, as per the provisional figures issued by stock exchanges.

Meanwhile, domestic equities staged a spectacular rebound after their recent phase of consolidation following across the board buying spree, with the Nifty ending the day at a new closing high of 9,359.90 and the Sensex soaring over 231 points to close at 30,126.21.

The rally was spearheaded by banking stocks after the Union Cabinet on Wednesday cleared an ordinance empowering the Reserve Bank of India (RBI) to act against wilful defaulters.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.2115 and for the euro at 69.9392.

In worldwide trade, the greenback traded marginally higher against major trading rivals as traders digested the possibility of ultra-long US bond issuance and after strong US services sector growth kept hopes alive for a Federal Reserve interest rate increase in June.

The dollar index, which tracks the US currency against a basket of six major rivals, was down 0.21 per cent at 99.05.

In cross-currency trade, the Indian unit hardened further against the pound sterling to finish at 82.72 from 82.91 per pound and also firmed up against the Japanese yen to conclude at 56.84 per 100 yens from the 57.17 earlier.

However, it fell back against the euro to close at 70.14 compared to 70 yesterday.

In the forward market today, premium for dollar remained weak due to sustained receivings from exporters.

The benchmark six-month premium for October edged down to 154-156 paise from 157-159 paise and the far-forward April 2018 also moved down to 312-314 paise from 317-319 paise on Wednesday.

On the international commodity front, crude prices turned weak in Asian trade after a report on Wednesday showed that US inventories fell less than expected.

This is published unedited from the PTI feed.