The rupee on Thursday hit a record intra-day low of 83.4525 to the dollar amid firm crude prices and strong demand for the US currency.
A rally in the stock markets helped the rupee to recover and close on a sideways note against the greenback.
In the inter-bank forex market, the rupee opened at 83.42 against the previous close of 83.43 amid some weakness in the US currency represented by Dollar Index (DXY).
The DXY — which measures the US currency against six other units — opened at 104.23 compared with the previous close of 104.25 and was trading at 103.96 at the time of this report.
Forex circles said due to persistent dollar demand from importers, the rupee hit a day’s low of 83.4525, inching past its previous low of 83.45 last Wednesday.
Traders said market participants are awaiting the RBI MPC policy decision for cues.
“We expect the rupee to trade with a slight negative bias on the surge in crude oil and gold prices. Renewed geopolitical tensions in West Asia and selling pressure from FIIs may also weigh on the rupee. However, strength in the domestic equities and reports of selling of dollars by RBI may support the rupee at lower levels,” said Anuj Choudhary research analyst, Sharekhan by BNP Paribas.
However, the stock rally led to the domestic currency later settling at 83.44.
The 30-share BSE Sensex rose 350.81 points or 0.47 per cent to settle at its lifetime high of 74227.63. The broader NSE Nifty also hit a fresh peak of 22514.65, gaining 80 points or 0.36 per cent. As many as 31 components of the index closed in the green.
Both the key indices hit fresh record highs due to buying in IT, consumer durables and financial stocks.
The optimism is that corporate India will report better performance in the results season. Banking stocks witnessed buying on hopes of a status quo from the monetary policy committee.
“The market breadth displayed a positive trend within a narrow trading range, with attention focused on the RBI’s monetary policy announcement on Friday. Expectations lean towards the likely status quo in the repo rate,” Vinod Nair, head of research, Geojit Financial Services, said.
“The broader market has shown resilience in select sectors like banks in anticipation of decent fourth quarter results and exports based on composite PMI data reflecting strong business conditions.”
Deadline deferred
The Reserve Bank of India (RBI) on Thursday deferred the implementation of its directions on exchange-traded currency derivatives (ETCD) to May 3 in view of feedback received from stakeholders.
The directions which were issued in January this year had caused a panic in the ETCD market since it mandates that participants in the currency derivatives market will need to have underlying contracted exposure.
In a statement, the RBI said the regulatory framework for the exchange traded currency derivatives has remained consistent over the years and that “there is no change in the RBI’s policy approach”.
