Rupee down 5 paise at 71.33 against US dollar

The rupee ended 5 paise lower at 71.33 against the US dollar on Wednesday as forex market turned cautious ahead of key macro data release. Besides, higher crude oil prices and strengthening of the American dollar against key currencies also put pressure on the domestic unit.

At the interbank foreign exchange market, the rupee opened at 71.24 per dollar. During the day, it swung between between a high of 71.21 and a low of 71.40. The domestic unit finally settled at 71.33, down 5 paise over its previous close. Meanwhile, global crude oil benchmark Brent Futures rose 2.17 per cent to trade at USD 55.18 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.03 per cent to 98.74.

Meanwhile, India's retail inflation jumped to over five-and-a-half-year high of 7.59 per cent in January on persistently high prices of vegetables, pulses and protein-rich meat and fish, according to government data, which was released post market hours.

While, industrial production growth turned negative in December, contracting by 0.3 per cent, mainly on account of a decline in manufacturing sector output.

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"Rupee started the day at strong as it escalated till 71.20 from yesterday's 71.30 levels on back of weaker crude oil prices. But crude prices are taking some support which is directly affecting the rupee in weak zone as USD/INR pair bounced from 71.20 to 71.30 plus...," Jateen Trivedi, senior research analyst (Commodity and Currency) at LKP Securities, said.

Broadly, crude prices have seen some moderation in the past few sessions over demand slump amid rising coronavirus cases in China and other regions. The 10-year Indian government bond yield was at 6.48 per cent.

On the domestic equity market front, the 30-share BSE gauge settled 349.76 points, or 0.85 per cent, higher at 41,565.90. It hit an intra-day high of 41,671.86. Similarly, the broader NSE Nifty jumped 93.30 points, or 0.77 per cent, to 12,201.20.

Provisional data showed that foreign institutional investors bought equities worth Rs 48.81 crore on a net basis on Wednesday.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.2291 and for rupee/euro at 77.7067. The reference rate for rupee/British pound was fixed at 92.0000 and for rupee/100 Japanese yen at 64.80.

"Rupee continued to consolidate in a narrow range for the fourth successive session ahead of inflation and industrial production number... Weaker-than-expected economic number could continue to keep the currency weighed down," said Gaurang Somaiyaa, Forex and Bullion Analyst, Motilal Oswal Financial Services.

The US dollar too has strengthened against its major crosses after Fed Chairman in his testimony mentioned that the central bank is closely monitoring the coronavirus for its impact on China and the global economy, Somaiyaa said. 

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