Rupee Gains 2 Paise to Close at 95.74 Against US Dollar

Mumbai: The rupee gained 2 paise to settle at 95.74 against the US dollar on Thursday as global crude oil prices softened and market participants eagerly awaited the RBI’s MPC decision on June 5.

Rising geopolitical tensions between the US and Iran led to energy volatility and aggressive safe-haven buying limited sharp gains in the local unit.

Forex traders said the protracted West Asian crisis poses a major risk for India, which is heavily dependent on energy imports.

With inflation, growth and the rupee in focus, market participants are now turning their attention to the Reserve Bank of India’s MPC rate decision on June 5. The six-member MPC, chaired by RBI Governor Sanjay Malhotra, will announce its decision on Friday.

In the interbank foreign exchange market, the rupee opened at 95.70 against the US dollar, then closed at 95.74, up 2 paise from its previous close, after hitting an intraday low of 95.87 and a high of 95.59.

On Wednesday, the rupee lost 40 paise value against the US dollar and closed at 95.76.

Meanwhile, the dollar index, which measures the strength of the dollar against a basket of six currencies, is trading at 99.31 with a decrease of 0.21 percent.

Global oil reference Brent crude oil was traded at $95.81 per barrel, down 2.04 percent in futures.

“We expect the rupee to trade with a negative bias due to geopolitical tensions and firm US treasury yields. Any reversal in the US dollar could also put pressure on the rupee. Crude oil prices remain high,” said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.

Choudhary added that any positive development in the US-Iran peace talks could prevent a sharp decline in the domestic unit.

“Traders can take clues from the upcoming weekly unemployment claims data from the US today (Thursday) and the non-farm payrolls report on Friday. Investors can pay attention to the monetary policy decision of the RBI,” Choudhary said, adding that “USDINR spot price is expected to trade in the range of 95.40 to 96.15.”

The high-powered Monetary Policy Committee, chaired by RBI Governor Sanjay Malhotra, began three-day brainstorming on Wednesday on expectations that the central bank may leave its key policy rate unchanged at 5.25 per cent as the conflict in West Asia poses challenges for both inflation and economic growth.

The six-member Monetary Policy Committee (MPC) will announce its decision on June 5, after three days of deliberations.

In the domestic stock market, Sensex increased by 13.84 points to 74,360.01 points, while Nifty increased by 10.95 points to 23,416.55 points.

Foreign institutional investors issued shares worth 4,447.06 billion rupees on a net basis on Thursday, stock exchange data showed.