Rupee gains 8 paise to close at 74.34 against US dollar

Mumbai, Aug. 2 (PTI): The rupee gained 8 paise to close at 74.34 against the US dollar on Monday, supported by a firm trend in domestic equities and a weak American currency.

Forex traders said the rupee is trading in a narrow range as investors are awaiting the RBI’s monetary policy meeting outcome for further cues.

At the interbank forex market, the local unit opened at 74.38 against the greenback and witnessed an intra-day high of 74.30 and a low of 74.43.

It finally ended at 74.34 against the American currency, registering a rise of 8 paise over its previous close. On Friday, the rupee had settled at 74.42 against the US dollar.

“Despite rebound in manufacturing PMI activities, price action in forex markets remained dull as participants choose to wait and watch ahead of RBI’s monetary policy scheduled on August 6,” said Dilip Parmar, Research Analyst, HDFC Securities.

India’s manufacturing sector activities witnessed the strongest rate of growth in three months in July. The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose from 48.1 in June to 55.3 in July, amid improved demand conditions and easing of some local COVID-19 restrictions.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, dipped 0.21 per cent to 91.97.

On the domestic equity market front, the BSE Sensex ended 363.79 points or 0.69 per cent higher at 52,950.63, while the broader NSE Nifty advanced 122.10 points or 0.77 per cent to 15,885.15.

Brent crude futures, the global oil benchmark, fell 1.07 per cent to USD 74.60 per barrel.

Meanwhile, foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth INR 3,848.31 crore, as per exchange data.

“Rupee traded in a small range between 74.30-74.40, as range-bound movement in US dollar kept muted sessions. The US Personal Consumption Index rose to 4 per cent in June, the highest level since 2008, and double the US Federal Reserve’s target of 2 per cent,” said Jateen Trivedi, Senior Research Analyst at LKP Securities.

Trivedi further noted that India’s Markit Manufacturing PMI came better than expected for July. Going ahead, the rupee can be seen between 74.25-74.55 range.

According to Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd, relentless intervention from the RBI kept the USDINR supportive in spite of a weak US Dollar Index.

“However, we expect volatility to pick up over this as we head to US jobs report on Friday. We expect the range to be between 74.20-74.60 over the near term,” Banerjee said.