Mumbai, July 28 (UNI) The Indian rupee appreciated 15 paise to close at 79.76 against the US dollar on Thursday on hopes of a slower pace of rate hike by the US Fed in the coming months and firm domestic equities. At the interbank foreign exchange market, the rupee ended at 79.76 against the US dollar, compared to 79.91 on Wednesday. The local currency declined 13 paise on Wednesday.
“Hopes for a slower pace of rate hikes pushed DXY and bond yields lower, credit spreads tighter and global equities higher. After digesting FOMC trajectory, DXY bounced back from the lows and now 106.20 acts immediate support, only a break of it may test 105.64 levels,” said Kunal Sodhani, Assistant Vice-President at Shinhan Bank India. The dollar index, which gauges the dollar’s strength against a basket of 6 currencies, rose 0.12 percent to 106.80.
Meanwhile, on the domestic front, Sensex was up 1,041.47 points, or 1.87 percent, at 56,857.79, and the Nifty 50 was up 287.80 points, or 1.73 percent, at 16,929.60. This was after the US Fed raised the interest rates by 75bps in line with market expectations.
On Wednesday, US Federal Reserve raised interest rates by 75 basis points, as was widely anticipated, and comments from Fed Chair Jerome Powell spurred hopes for a slower hiking path. The FOMC statement downgraded its assessment of the economic situation and admitted that recent indicators of spending and production have softened.
However, Brent crude oil prices remained higher at $104.41 per barrel, which limited the gains on the Indian currency. Further rise in Brent crude oil prices will put some pressure on the rupee in the near term.
“Higher crude prices kept gains limited in rupee. Going ahead route can be seen in the range of 79.50-79.95,” said Jateen Trivedi, VP Research Analyst at LKP Securities.
Analysts expect that for USD/INR, 79.55 acts as immediate support while 79.95 is resistance.
