The rupee depreciated 6 paise to settle at 83.39 (provisional) against the U.S. dollar on March 28 due to a strengthening greenback against major rivals overseas and rising crude oil prices in the international markets.
However, a firm trend in domestic equity markets and recent foreign fund inflows supported the domestic currency, forex traders said.
At the interbank foreign exchange market, the local unit opened at 83.32 and oscillated between the intra-day peak of 83.30 and the lowest level of 83.40 against the greenback. The local unit finally settled at 83.39 (provisional), registering a loss of 6 paise from its previous close.
On March 27, the rupee declined 4 paise to close at 83.33 against the U.S. dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.34% higher at 104.42.
Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas, said the Indian rupee depreciated on March 27 on strong U.S. dollar and dollar demand from oil marketing companies (OMCs). Weak Asian currencies and a rise in crude oil prices also weighed on the rupee. However, the surge in domestic markets and FII inflows cushioned the downside.
"We expect the rupee to trade with a slight negative bias on strong U.S. dollar and weak Asian currencies. Demand for dollars from importers and OMCs towards the end of the financial year may put downside pressure also weigh on the rupee.
"However, strong domestic markets may support the rupee at lower levels. Traders may take cues from final GDP, weekly unemployment claims, pending home sales and revised consumer sentiment data from the US. USD-INR spot price is expected to trade in a range of ₹83.20 to ₹83.70," Mr. Choudhary said.
Brent crude futures, the global oil benchmark, rose 0.52% to USD 86.54 per barrel.
On the domestic equity market front, Sensex surged 655.04 points, or 0.90%, to settle at 73,651.35 points. The Nifty rose 203.25 points, or 0.92%, to close at 22,326.90 points.
Foreign institutional investors (FIIs) were net buyers in the capital markets on Wednesday as they purchased shares worth ₹2,170.32 crore, according to exchange data.
