Rupee falls 11 paise to close at 95.55 against US dollar

The rupee pared initial gains and settled for the day lower by 11 paise at 95.55 (provisional) against the US dollar on Thursday, on a strong American currency and weak domestic markets.

Forex traders said the broad strength of the American currency in the overseas market negated the support from easing crude oil prices.

Brent prices fell below the $90 mark for the first time in several sessions amid continuing discussions between Iran and Oman regarding a temporary shipping corridor through the Strait.

While no final agreement has been reached, the fact that negotiations are continuing has reduced fears of a prolonged disruption to global oil supplies, forex traders said.

At the interbank foreign exchange, the rupee opened at 95.50, then touched an intraday high of 95.40 and a low of 95.56 and finally settled for the day at 95.55 (provisional) against the greenback, lower by 11 paise from its previous close.

On Tuesday, the rupee settled for the day higher by 26 paise at 95.44 against the US dollar. The Indian foreign exchange market was closed on Wednesday on account of Id-e-Milad.

According to forex traders, market participants will be closely monitoring US Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium.

According to Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, the rupee’s story this month is really the story of the flows.

“The special swap facility has attracted total inflows of nearly $73 billion as of August 21, over $65 billion through FCNR(B) deposits alone, roughly two-and-a-half times what the celebrated 2013 scheme raised, and with the final rush into the August 31 deposit deadline and the ECB window open until December, we estimate total flows under these schemes could touch $85 to $90 billion,” Banerjee said.

The inflows have created a formidable war chest, and it means the rupee’s appreciation potential remains largely unspent, he said, adding, “We expect a 95 to 96 operational range, and a close below 95 would open a move towards 94. We remain bullish on the Indian rupee.” Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.21, higher by 0.05 per cent.

Brent crude, the global oil benchmark, was trading higher by 0.61 per cent at $88.38 per barrel in futures trade.

On the domestic market front, Sensex fell 539.35 points to settle at 76,933.59, while the Nifty dropped 116.90 points to 24,090.85.

Foreign institutional investors purchased equities worth Rs 502.63 crore on a net basis on Wednesday, according to exchange data.