Rupee trades in narrow range against USD amid hawkish US Fed policy

NewsDrum Desk
02 Feb 2023
Rupee trades in narrow range against USD amid hawkish US Fed policy

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Mumbai: The rupee was trading in a narrow range against the US dollar in opening trade on Thursday, tracking a muted trend in domestic equities.

Forex traders said investors preferred to stay on the sidelines as the US Fed policy statement was hawkish.

At the interbank foreign exchange, the domestic unit opened weak at 81.81 against the dollar, then fell further to 81.86, registering a decline of 6 paise over its last close. It later pared its losses and was trading flat at 81.80 against the greenback.

On Wednesday, the rupee appreciated 8 paise to close at 81.80 against the dollar after Finance Minister Nirmala Sitharaman presented the Union Budget for 2023-24.

"The budget ticked most boxes. Government managed to strike a balance between maintaining capex thrust and attaining fiscal consolidation," IFA Global Research Academy said in a research note.

Budgeted capex at Rs 10 lakh crore is 33 per cent higher year-on-year. Fiscal deficit meanwhile has been budgeted at 5.9 per cent of GDP (Rs 17.8 lakh crore) for FY24, in line with most market estimates.

"Estimates for GDP growth, tax buoyancy, disinvestment look reasonable," the research note said, adding that "the rupee is likely to trade in a 81.55-81.90 range intra-day with strengthening bias".

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.28 per cent to 100.93, after the US Fed hiked the Fed funds rate along expected lines by 25 basis points to 4.50-4.75 per cent.

"The Fed acknowledged that inflation had eased somewhat, but continued to remain elevated. It reiterated that ongoing rate increase would be appropriate," the note said.

Brent crude futures, the global oil benchmark, advanced 0.77 per cent to USD 83.48 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 24.67 points or 0.04 per cent lower at 59,683.41. The broader NSE Nifty declined 31.50 points or 0.18 per cent to 17,584.80.

Foreign Institutional Investors (FIIs) turned net buyers in the capital markets on Wednesday as they purchased shares worth Rs 1,785.21 crore, according to exchange data.

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