The Indian rupee closed stronger against the US dollar on Wednesday as banks persistently sold the greenback, likely on behalf of the Reserve Bank of India.
The currency appreciated 2 paise against US currency to settle at Rs 83.55, compared to Rs 83.57 a dollar on Tuesday. The rupee opened at Rs 83.54, the lowest since April 19, according to data on Cogencis.
The rupee continued to depreciate up to Rs 83.57, with the RBI defending it towards the end. However, dollar selling pushed the price up to Rs 83.5075. The RBI seems to be active in the NDF market, as rates there appear to be lower than in the over-the-counter market," said Anil Kumar Bhansali, head of Treasury and executive director at Finrex Treasury Advisors LLP.
The dollar index declined 0.03% to trade at 105.20 ahead of the US inflation print for May and the Federal Open Market Committee's policy decision due later today. This supported the currency.
"If today's US CPI and Fed remain below expectations in their policy meeting and the Fed remains dovish, the dollar index will correct to 104.00, and the rupee may move towards Rs 83.25 levels. The probability for which is 40%," said Amit Pabari of CR Forex Advisors.
"If it’s in line with expectations of the data-dependent Fed, the dollar index shall remain in a range of 104.50 to 105.50, and the rupee will consolidate near Rs 82.0–83.50," Pabari said.
"Today we also have the Indian inflation forecasted to come at 4.8%. We expect the rupee to hover between Rs 83.40 and Rs 83.60. Exporters are advised to take hedges at current levels (Rs 83.56), and importers are advised to take hedges below Rs 83.45," said Ritesh Bhanshali, director at Mecklai Financial Services.
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