rupee: Rupee breaks 9-day winning streak, slips 1 paisa against US dollar

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MUMBAI: The rupee snapped its nine-day winning streak to settle just one paisa lower at 74.71 against the US dollar on Wednesday, as muted domestic equities and a strong greenback overseas weighed on the market sentiment.
At the interbank foreign exchange, the rupee started on a tepid note at 74.69 against the dollar. During the day, it witnessed a high of 74.68 and a low of 74.86.
The domestic unit finally ended at 74.71, a decline of just one paisa over the last close.
In the previous session, the rupee registered its ninth straight gain and surged 30 paise to close at a one-month high of 74.70 against the greenback.
The rupee is expected to trade in a close range this week amid the year-end holidays, forex traders said.
“Rupee traded in a narrow range, but volatility was low as market participants remained on the sidelines following the New Year holidays.
“On the domestic front, fiscal balance numbers will be the only important data to watch, and a higher deficit could restrict gains for the currency,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
The dollar rose on the back of safe-haven buying following the rise in Covid cases and on expectations the Federal Reserve could raise interest rates as early as March.
“Today, from the US, the trade balance number will be released and that could trigger volatility for the dollar. We expect the USD/INR (Spot) to trade in the range of 74.50 and 75.20,” Somaiyaa added.
On the domestic equity market front, the BSE Sensex ended 90.99 points or 0.16 per cent lower at 57,806.49, while the broader NSE Nifty declined 19.65 points or 0.11 per cent to 17,213.60.
Meanwhile, the dollar index, which measures the greenback’s strength against the basket of six currencies, advanced 0.18 per cent to 96.37.
Brent crude futures, the global oil benchmark, rose 0.11 per cent to $79.03 per barrel.
“Rupee traded muted around 74.75 in line with the dollar index which was hovering around 96.40. Holiday mood kept the market muted and in a small tight volatile range,” said Jateen Trivedi, Senior Research Analyst at LKP Securities.
Trivedi further said that “traders await the first week of January 2022 with OPEC+ outcome, the first trigger for markets. The range for the rupee can be seen between 74.50-74.95”.
Foreign institutional investors turned net buyers in the capital market on Tuesday, as they purchased shares worth Rs 207.31 crore, as per stock exchange data.
According to Emkay Global Financial Services, “the soft risk-on/risk-off dynamics will keep the range-bound move in spot and we can expect it to trade within 74.50-75.30”.

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