The rupee settled marginally higher by two paise against the US dollar on Wednesday, January 27, at 72.92 (provisional) amid weaker domestic equities and ahead of the US central bank’s – Federal Reserve meeting. At the interbank foreign exchange market, the domestic unit opened at 72.91 against the dollar and registered an intra-day high of 72.78. It witnessed a low of 72.94 in day trade. In an early trade session, the local unit gained eight paise to 72.86 against the greenback. The rupee finally finished at 72.92, higher by two paise over its last close. The forex and equity markets were closed on Tuesday, January 26, on account of Republic Day. On Monday, January 25, the rupee had settled at 72.94 against the American currency.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, climbed 0.25 per cent to 90.39. Sharp gains for the rupee were prevented due to a steep decline in domestic markets. “The downside in USDINR spot is getting cushioned by IMF’s impressive projection about India’s 2021 growth. The downtrend will continue as long as Fed remains accommodative, but any update from Powell about future tapering or delay in US fiscal stimulus rollout will lead to a reversal in USDINR spot. A fall below 72.75 will push price towards 72.50 zone, however a reversal may take spot towards 73.50 zone,” said Mr. Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
“The rupee appreciated ahead of US Federal Reserve monetary policy meeting. US Federal Reserve is expected to continue with its ultra-lose monetary policy,” said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas. Additionally, market participants are careful ahead of the progress on US stimulus package, Mukadam noted.
The International Monetary Fund (IMF) on Tuesday, January 27, projected an 11.5 per cent growth rate for the country in 2021, making the country the only major economy of the world to register double-digit growth this year amid the COVID-19 pandemic.