The rupee’s appreciation was also supported by likely dollar inflows due to overseas debt fund raising by corporates, currency traders said.
They said that further gains were capped amid weak risk appetite in the region. “Expectations of faster Fed rate increase and stronger crude oil prices also kept appreciation bias limited,” said Shiram Iyer, senior research analyst at Reliance Securities.
Factors like multi-year crude oil prices, surging US real yields, equity market volatility are likely to keep the rupee volatile, said Anindya Banerjee, currency analyst at Kotak Securities.
Emkay
expects the currency to see the 74.95/75.20 levels in the coming weeks. Support on dips is seen around 74.40 on the spot, it said.
The local unit opened weaker at 74.66 a dollar against its previous close of 74.58 and depreciated further to 74.70 in early trades, tracking the rise in crude oil prices which hit their highest since 2014. There was pressure on the global crude oil market following Tuesday’s explosion on an oil pipeline which carries more than 450,000 barrels a day from Iraq to Turkey.
Turkey resumed crude oil flows on Wednesday after the fire as a result of the explosion was extinguished.
Regional currencies were mixed while India’s BSE Sensex dropped 1.1%, extending Tuesday’s fall. Indian bond yields closed lower amid short covering and likely foreign inflows in bonds, said Iyer. The benchmark 6.10% bond ended at 6.60%, versus 6.63% close in the previous session.
