Rupee pares losses on hope of US-China trade deal; closes 5p down
The rupee pared most of its initial losses and settled the day marginally down by 5 paise as China offering to buy additional US goods to ease trade tensions bolstered hopes of a partial deal between the two major economies.
Forex traders said most of the Asian currencies gained against the US dollar on China's offer to buy extra US goods.
At the interbank foreign exchange market, the rupee opened lower at 71.20 against the US dollar. During the day, the domestic unit fluctuated between a high of 70.94 and a low of 71.22.
The local unit finally settled at 71.07, down 5 paise over its previous close.
On Monday, the domestic unit had settled at 71.02. Forex market was closed on Tuesday on account of the Dussehra festival.
"The local unit opened lower but gradually recovered from the day's low on the expectation of partial deal between US and China trade," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
Forex traders said market participants are hopeful about the US-China trade meeting on October 10.
"Most of the Asian currencies gained against the dollar after China offer to buy extra USD 10 billion of US Agriculture goods and open for partial trade deal," Sharma said.
Forex traders said a strong recovery in the domestic equity market and weakening of the American currency vis-a-vis other currencies overseas also helped the rupee pare initial losses.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 485.24 crore on Wednesday, exchange data showed.
Brent futures, the global oil benchmark, increased 1.01 per cent to USD 58.83 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.09 per cent to 99.04.
The 10-year government bond yield was at 6.45 per cent on Wednesday.
On the domestic market front, the BSE Sensex surged 645.97 points or 1.72 per cent to end at 38,177.95, while the broader NSE Nifty zoomed 186.90 points or 1.68 per cent to 11,313.30.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.9763 and for rupee/euro at 77.9282. The reference rate for rupee/British pound was fixed at 87.4182 and for rupee/100 Japanese yen at 66.41.
