Mumbai: The rupee recouped early losses and settled almost flat at 76.55 (provisional) against the US dollar on Wednesday on expectations of higher dollar inflows.
However, a lacklustre trend in domestic equities and the strength of the greenback in the overseas market weighed on the local unit, forex traders said.
At the interbank forex market, the domestic unit opened at 76.69 against the US dollar and touched an intra-day high of 76.50. It finally closed at 76.55, registering a rise of just 1 paisa over its previous close of 76.56.
According to HDFC Securities Research Analyst Dilip Parmar, the rupee managed to recoup early morning losses and settled with a slight gain on the expectation of dollar inflows from initial public offerings (IPOs) and corporate dollar selling.
“Most of the Asian currencies were down against the US dollar, while strength in the Chinese Yuan supported the local unit,” Parmar said.
The US Federal Reserve’s shift to a more aggressive rate tightening concern is mounting in capital outflows from emerging markets and India as one of them, this has added pressure on the rupee against the US dollar.
Foreign institutional investors have withdrawn more than USD 17.5 billion from domestic equities and debt in the past four months.
“Spot USD/INR is expected to trade in the range of 76.30 to 76.75 with near-term bias remaining bullish as long as it holds 76.40,” Parmar noted.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.27 per cent higher at 102.58.
On the domestic equity market front, the 30-share BSE Sensex ended 537.22 points or 0.94 per cent lower at 56,819.39, while the broader NSE Nifty fell 162.40 points or 0.94 per cent to 17,038.40.
Brent crude futures, the global oil benchmark, inched up 0.62 per cent to USD 105.64 per barrel.
Foreign institutional investors were net sellers in the capital market on Tuesday, as they offloaded shares worth Rs 1,174.05 crore, as per stock exchange data.