The rupee on Wednesday closed down by a marginal two paise at 54.16 against the dollar due to fag-end demand for the US currency on reports of defence-related payments.
“Dollar demand for defence-related purchases kept rupee under pressure on Wednesday which made its movement range bound for the day,” said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
However, sustained capital inflows and strong local equities helped rupee to ease some pressure, forex dealers said.
Overseas investors pumped in Rs 976.99 crore (over $ 180 million) into domestic stocks today, according to BSE provisional data.
The rupee commenced higher at 54.10 against the dollar from yesterday’s close of 54.14 at the Interbank Foreign Exchange (Forex) market. It moved in a range of 54.04-54.20 before settling at 54.16, a fall of two paise, due to mild dollar demand a few minutes before closing of trade.
“...Globally, the Euro was seen trading above $ 1.31 levels backed by the strong economic data from Germany. However we feel its major trend remains bearish,” said Abhishek Goenka, Founder and CEO, India Forex Advisors.
The dollar index was down by 0.25 per cent against a basket of six major global currencies as the euro rose after German industrial output rose more than expected in March.
Meanwhile, the BSE benchmark Sensex on Wednesday rallied by 101.23 points to 19,990.18.
Though the rupee closed in negative terrain, it was seen supported by the upcoming stake sale and foreign fund flows.
The premium for the forward dollar dropped further on continued receiving by exporters.
The benchmark six-month forward dollar premium payable in October moved down to 172-1/2-174 paise from previous close of 176-1/2-178 paise and far-forward contracts maturing in April also dipped to 339-341 from 344-346 paise.
The RBI fixed the reference rate for the US dollar at 54.1600 and for the euro at 70.9980.
The rupee improved further against pound sterling to 83.95 from Tuesday’s close of 84.11 while remained weak against the euro to 71.07 from 71.03.
It also declined against the Japanese yen to 54.70 per 100 yen from last close of 54.58.