rupee rate today: Rupee gains ground, opens 13 paise higher vs dollar as equities hold firm

NEW DELHI: After shedding 0.8 per cent versus the US dollar last week, the rupee regained some ground on Monday as dealers took heart from strength in domestic equities although caution ahead of the US Federal Reserves’ policy statement on Wednesday kept the Indian currency confined to a tight range.

The partially convertible rupee opened at 75.6350 per US dollar on Monday as against 75.7650 on Friday, which was the lowest closing level in more than 18 months. So far in the day, the domestic currency moved in a range of 75.6350-75.6750 to a dollar.

Risk appetite remained weak ahead of the crucial statement by the Fed, especially as recent data on inflation and unemployment benefits strengthened the case for the US central bank to shift to a tighter monetary policy, which could impact the trajectory of capital flows into emerging markets such as India.

Data released Friday showed that initial unemployment benefit claims in the US gained by a lesser-than-expected quantum of 28,000 to 222,000 for the week that ended on November 27.

Meanwhile, consumer price inflation – one of the key metrics used by the Fed while deciding on monetary policy – jumped to a near 40-year high in November, printing at 6.8 per cent year-on-year. The data was released after Indian trading hours on Friday.

With selling pressure from foreign portfolio investors in domestic equities showing little signs of abating, currency traders feared that hawkish monetary policy guidance in the world’s largest economy could spur fresh outflows, especially towards the end of the calendar year.

A rise in global crude oil prices also kept the rupee’s gains in check on Monday, dealers said. Oil prices rose on Monday, extending gains from last Friday, helped by growing optimism that the Omicron coronavirus variant’s impact will be limited on global economic growth and fuel demand.

Brent futures climbed 53 cents, or 0.7 per cent, to $75.68 a barrel by 0100 GMT. US West Texas Intermediate (WTI) gained 69 cents, or 1 per cent, to $72.36 a barrel. Hardening oil prices hurt India’s inflation and current account as the country is a huge importer of the commodity.

“The sentiment is quite weak before the Fed’s statement,” a dealer with a state-owned bank said. “There is some technical positioning after the huge selloff last week in the rupee and equities are supportive, but overall most people want to go long dollar before the Fed policy,” he said.

At 9.26 am, BSE flagship Sensex was up 336 points or 0.57 per cent to 59,123. NSE benchmark Nifty rose 104 points or 0.59 per cent to 17,615.

Government bonds were unchanged, with the yield on the 10-year benchmark 6.10 per cent paper at 6.37 per cent, flat versus Friday.

Bond traders exercised caution ahead of the release of India’s CPI inflation, scheduled after trading hours Monday. The retail price gauge is seen around 5.0-5.2 per cent in November, up from 4.48 per cent in October, dealers said.

An unfavourable base effect and high prices of vegetables are seen exerting upward pressure on retail prices in the coming months. The RBI aims to keep CPI inflation at 4 per cent over the medium term, while its mandated target range is 2-6 per cent.

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