Rupee rises 7 paise to close at 88.72 against US dollar

Mumbai, Oct 10 (PTI) The rupee appreciated 7 paise to close at 88.72 against the US dollar on Friday, on strength in the domestic markets and broad weakness in crude oil prices.

Forex traders said the rupee gained on strong domestic markets and overnight decline in commodity prices.

Intervention by the central bank also supported the domestic currency. However, a strong US dollar capped sharp gains, they added.

At the interbank foreign exchange, the rupee opened at 88.80 and traded in the range of 88.50-88.80 before settling at 88.72, higher by 7 paise from its previous close.

On Thursday, the rupee closed at 88.79 against the greenback.

"We expect the rupee to trade with a positive bias on strength in the domestic markets and broad weakness in crude oil prices. US government shutdown and rising odds of a rate cut by the US Federal Reserve may further strengthen the rupee," said Anuj Choudhary, Research Analyst, Currency and commodities, Mirae Asset ShareKhan.

Choudhary further added that "a strong US dollar and importer demand for dollars may cap sharp upside. USD-INR spot price is expected to trade in a range of 88.40 to 88.85".

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.21 per cent lower at 99.32, as safe-haven demand for dollars continues keeping the dollar well bid.

Brent crude, the global oil benchmark, was trading lower by 0.61 per cent at USD 64.85 per barrel in futures trading.

Dilip Parmar, Research Analyst, HDFC Securities, said, the rupee logged healthy gains against the dollar, bolstered by foreign inflows into domestic equities and a retreat in crude oil.

"For the spot USD-INR pair, we see immediate technical support at 88.50, with strong resistance at 88.85 in the near term," he added.

On the domestic equity market front, the benchmark sensitive index Sensex advanced 328.72 points, up 0.40 per cent to 82,500.82, while the Nifty climbed 103.55 points or 0.41 per cent to 25,285.35.

Meanwhile, Foreign Institutional Investors bought equities worth Rs 459.20 crore on Friday, according to exchange data.

According to RBI data, the country's forex reserves fell by USD 276 million to USD 699.96 billion during the week ended October 3. In the previous reporting week, forex reserves had dropped by USD 2.334 billion to USD 700.236 billion. PTI DRR HVA