Rupee drops 6 paise to 74.82 on suspected RBI intervention

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The rupee pared its initial gains to settle 6 paise lower at 74.82 against the US dollar on Wednesday due to suspected RBI intervention and uncertainty ahead of the release of minutes of the US Federal Reserve meeting.

At the interbank forex market, the domestic unit opened at 74.71 against the US dollar, but lost ground and finally settled at 74.82 against, down 6 paise over its previous close of 74.76.

During the session, the local unit witnessed an intra-day high of 74.67 and a low of 74.93 against the greenback.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04 per cent to 92.23.

The market focus is on Fed minutes, Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services said.

"We do not expect Fed to indicate any new monetary stimulus initiatives in the minutes, but the market's attention would be on any change to Fed's approach to inflation that could be negative for the dollar," he said.

Thus, the dollar's fall boosting the rupee will continue to play and USDINR will trade within 74.50-75.20, he added.

Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services said, "Rupee after opening higher against the US dollar fell on suspected RBI intervention but weakness is expected to remain restricted as the greenback continued to remain under pressure against its major crosses."

Gupta also stated the fall in dollar index and positive stock indices have put a lot of pressure on USDINR spot. But active participation by the RBI is keeping spot in a very tight range of 74.50-75.

Stock market benchmark indices ticked higher for the third straight session on Wednesday. The BSE Sensex closed at 38,614.79, up 86.47 points or 0.22 per cent. The NSE Nifty rose 23.05 points or 0.20 per cent to 11,408.40.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 459 crore on Wednesday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, slipped 0.92 per cent to USD 45.04 per barrel.

"The Indian Rupee depreciated this Wednesday against the US Dollar as likely intervention by the central bank in the spot market outweighed the impact of a broad dollar decline," said Sriram Iyer, Senior Research Analyst, Reliance Securities.

The US Dollar was weak in the early morning session; however, the afternoon session saw some recovery ahead of the Fed minutes, Iyer added.