Rupee closes marginally lower amid dollar strength

Rupee settles lower: rupee closed slightly weaker against US dollar on Wednesday, influenced by performance of its Asian counterparts.

Despite dollar sales from state-run banks providing some relief, rupee ended session at 82.9225 against dollar, down marginally from its previous close at 82.8975.

dollar index, which measures greenback against a basket of major currencies, rose by 0.3 per cent to 104.2. This strength in dollar was reflected in weakness of Asian currencies, with Thai baht and Philippine peso both declining by 0.5 per cent.

Jateen Trivedi, VP Research Analyst, LKP Securities, stated, " rupee tred sideways at 82.91, down by Rs 0.02. It fluctuated within range of 82.88–82.96 as market participants remained cautious. US dollar strengned above $104, exerting slight pressure on rupee to stay below 82.85." 

rupee tred within a narrow range for most of day but slipped towards end of session due to an uptick in dollar index, according to a foreign exchange trer at a private bank.

Meanwhile analysts expect currency to consolidate within range of 82.80 to 83.15 in near term. Meanwhile, dollar-rupee forward premiums declined, with one-year implied yield falling by 3 basis points to 1.64 per cent, its lowest level in over two and a-half months.

decline in implied yield is attributed to reduced expectations of a rate cut by Federal Reserve and improved liquidity conditions for rupee.

Investors are now awaiting release of revised US GDP data for October–December quarter and remarks from Fed officials later in day, which could provide insights into future policy rates.