Rupee rises 4 paise to close at 83.89 against U.S. dollar

According to RBI Governor Shaktikanta Das, the current policy rate of 6.5% is broadly balanced, and any justification for policy easing at this juncture can be misleading. File
| Photo Credit: The Hindu

The rupee traded in a narrow range and settled higher by 4 paise at 83.89 (provisional) against the American currency on Friday (August 23, 2024), as traders remained cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium.

Forex traders said the weak U.S. dollar, foreign fund inflows and a positive tone in the domestic markets supported the rupee. However, overnight gains in crude oil prices capped sharp gains.

At the interbank foreign exchange market, the local unit opened weak at 83.93 and touched an intraday high of 83.85 against the U.S. dollar. The domestic currency finally settled at 83.89 (provisional), 4 paise higher than its previous close.

On Thursday (August 22, 2024), the rupee traded in a narrow range and settled lower by 3 paise at 83.93 against the American currency.

“We expect the rupee to trade with a slight negative bias as traders remain cautious ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, which could provide some cues on the Fed’s path to cut interest rates.

“Weak US and Asian markets and a recovery in crude oil prices may pressure the rupee, while positive domestic markets may support the rupee at lower levels,” said Anuj Choudhary, research analyst at Sharekhan by BNP Paribas.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.10% lower at 101.40.

Brent crude, the global oil benchmark, advanced 1.05% to $78.03 per barrel.

On the domestic equity market, Sensex advanced 33.02 points, or 0.04%, to close at 81,086.21 points. The Nifty rose 11.65 points, or 0.05%, to 24,823.15 points.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Thursday (August 22, 2024) as they purchased shares worth ₹1,371.79 crore, according to exchange data.

On the domestic macroeconomic front, the minutes of the last Monetary Policy Committee (MPC) released by the Reserve Bank of India (RBI) on Thursday (August 22, 2024) noted that the calibrated increase in policy repo rate by 250 basis points since May 2022 and subsequent change of stance to the withdrawal of accommodation have facilitated gradual disinflation over 2022–23.

According to RBI Governor Shaktikanta Das, the current policy rate of 6.5% is broadly balanced, and any justification for policy easing at this juncture can be misleading.