Rupee snaps 3-day winning streak, drops 10 paise to 74.59/USD

·3-min read

Mumbai, Jul 14 (PTI) Halting its three-day winning run, the rupee on Wednesday declined by 10 paise to close at 74.59 against the US currency due to a stronger dollar in overseas markets and weak macro data.

The US dollar stayed near its three-month high level ahead of the US Federal Reserve Chairman Jerome Powell's comment as the US inflation soared to a 13-month high in June.

'The Indian rupee depreciated on Wednesday as higher inflation from the US could taper off bond purchases sooner than expected,' Sriram Iyer, Senior Research Analyst at Reliance Securities said.

At the interbank foreign exchange market, the domestic currency opened at 74.57 against the American currency, and slipped further to close at 74.59, registering a decline of 10 paise over its previous close. On Tuesday, the rupee had closed at 74.49 against the US dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, had surged to 92.83 level before slipping to 92.70 on Wednesday.

'The market focus is on how Jerome Powell will react to the surging US CPI data and how long can Federal Reserve policy stay ultra-loose. Powell’s dovish tone at tonight's semi-annual testimony, will be negative for USDINR spot but if he talks about tapering the bond purchases then we may see the spot to trade towards 75 zone,' said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.

As long as the spot trades above 74.40, the trend will remain positive, only a break of 74.40 will push prices towards 74.00 zone, Gupta added.

Meanwhile, wholesale price-based inflation remained in double-digits at 12.07 per cent in June even as crude oil and food items witnessed some softening in prices.

Experts said the continuing double-digit WPI inflation and its potential future spillovers into the retail inflation could inject uneasiness into the tone of monetary policy and noted that WPI is expected to remain at an elevated level till October 2021.

On the domestic equity market front, the BSE Sensex ended 134.32 points or 0.25 per cent higher at 52,904.05, while the broader NSE Nifty advanced 41.60 points or 0.26 per cent to 15,853.95.

Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 113.83 crore, as per exchange data.

Brent crude futures, the global oil benchmark, fell 0.75 per cent to USD 75.92 per barrel.

Asian currencies also weakened this Wednesday and while several countries tightened restrictive measures as cases involving the virus' Delta variant increased and also weighed on sentiments, Iyer said.

However, traders awaited the Federal reserve Chairman's testimony for further cues. Investors will keenly listen for any clues on when the central bank will begin asset tapering and hiking interest rates, Iyer said.

According to Jateen Trivedi, Senior Research Analyst at LKP Securities, 'Rupee traded with minor losses on the back of support in dollar index near USD 92.50, even though the WPI inflation numbers were in line, rupee seemed to ignore the data.' Gupta further noted that 'going ahead rupee can be seen in the range 74.45-74.75 in coming sessions.' PTI DRR MR

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting