Rupee closes almost flat 81.71 against USD on month-end dollar demand

Mumbai, Nov 25 (PTI) The rupee settled almost flat at 81.71 against the US currency on Friday as month-end dollar demand from oil importers offset gains from a weak greenback and forex inflows.

Forex traders said positive domestic equities and improved risk sentiment also supported the local unit.

At the interbank foreign exchange market, the local unit opened at 81.69 and touched an intra-day high of 81.44 and a low of 81.71 against the greenback.

The local unit finally settled at 81.71, registering a fall of 1 paise over its previous close. On Thursday, the rupee appreciated by 23 paise to close at 81.70 against the US dollar.

"The Indian Rupee settled weaker on Friday against the dollar on Friday amid dollar demand from importers. For the week, the local unit was little changed as weak dollar index offset losses from importer dollar demand," Sriram Iyer, Senior Research Analyst at Reliance Securities, said.

Forward premiums slipped to fresh 10-year lows with the 1-year implied premiums ending at 2.05 per cent this Friday on buy/sell swaps by interbank and corporates from 2.17 per cent last week, Iyer said.

Meanwhile, amongst Asian peers, Chinese Yuan remained weak on weak outlook, while other peers remained range bound.

Domestically, India’s September quarter GDP data is due next week and will be a key trigger for the domestic markets, Iyer said.

India's bond yields rose on Friday. The benchmark 10-year bond yield ended at 7.301 per cent after closing at 7.255 per cent on Thursday.

A weak US Dollar and foreign fund inflows supported the rupee, said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.

The US dollar declined on extended losses as the Federal Open Market Committee (FOMC) minutes showed that a majority of Federal Reserve policymakers agree that it would likely soon be appropriate to slow the pace of rate hike. This led to a surge in global markets and decline in safe haven appeal, Choudhary said.

"We expect the rupee to trade with a positive bias on weak dollar and improved risk sentiments amid expectations of a slower pace of rate hike by the Fed. However, month-end dollar demand from importers and concerns over rising COVID-19 cases in China may cap sharp upside," Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was 0.11 per cent lower at 105.96.

Global oil benchmark Brent crude futures climbed 1.70 per cent to USD 86.79 per barrel.

On the domestic equity market front, the 30-share BSE Sensex rose 20.96 points or 0.03 per cent to end at 62,293.64, while the broader NSE Nifty gained 28.65 points or 0.15 per cent to 18,512.75.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 369.08 crore, according to exchange data. PTI HVA MR