Dollar recovery from record low to close 12 paise higher

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Dollar recovery from record low to close 12 paise higher

The overnight weakness of the dollar and the falling crude oil prices was tracked on Thursday by the recovery from its record low to close 12 paise higher at 78.10 against the American currency.

The dollar index fell from its elevated levels after the Fed raised interest rates by 75 basis points in a historic move to fight inflation and projected a slowing economy and rising unemployment in the months to come, traders said.

The price was opened at 78.06 against the dollar on the interbank forex market and moved in a narrow range from 78 to 78.12.

It ended up at 78.10, higher by 12 paise over its previous close.

The new lifetime low of 78.22 had plunged 18 paise on Wednesday.

The dollar index, which measures the strength of the dollar against a basket of six currencies, fell 0.13 per cent to 105.02.

The global oil benchmark, Brent crude futures, fell 0.25 per cent to USD 118.21 per barrel.

Dilip Parmar, Research Analyst, HDFC Securities said the rupee got support from the fall in crude oil prices even after higher trade deficit numbers, weaker regional currencies and risk-averse sentiments.

India's merchandise exports increased by 20.55 per cent to USD 38.94 billion in May, while the trade deficit went to a record USD 24.29 billion, according to the government data released on Wednesday.

Parmar noted that there is a possibility of a relief rally in the rupee in the near-term, but odds of 78.50 are very alive.

Parmar said that spot USD-INR is expected to consolidate in the range of 77.70 to 78.30 as the FOMC event ends, the focus will shift back to fund flows and risk moods for rupee movements.

The BSE Sensex ended 1,045 on the domestic equity market front. It was 60 points or 1.99 per cent lower at 51,495. The broader NSE Nifty plunged 331.55 points or 2.11 per cent to 15,360 at 79. Foreign institutional investors remained net sellers in the capital market on Thursday as they offloaded shares worth Rs 3,257. According to the stock exchange data, 65 crore are reported to be in possession of.

The Indian rupee ended up steady after trading in a small range against the dollar. Sriram Iyer, Senior Research Analyst at Reliance Securities said that the dollar purchases by importers capped potential gains for the local currency, but Asian currencies gained and capped depreciation bias for the local unit.

The Index rebounded from the low in European trade, maintaining a positive tone as traders digested the Federal Reserve's policy decisions.

According to Jateen Trivedi, VP Research Analyst at LKP Securities, the rupee traded firm near 78.10 has dropped strongly from USD 125 and is now below USD 118 in Brent, giving relief to rupee buyers.

The US Fed hiked rates by 0.75 per cent. The statement from the Fed seemed hawkish as it indicated further rate hikes until the time inflation is not in control, Trivedi said, adding that the rupee generally seems to be in weakness until the time 77.50 is not crossed.