The rupee gained early on Thursday as the dollar paused to take a breather ahead of the key US Federal Reserve’s Jackson Hole conference and on robust capital inflows.
PTI reported that the Indian currency rose 6 paise to 79.80 against the US dollar in early trade.
At the interbank foreign exchange, the domestic unit opened at 79.80 against the dollar, registering a gain of 6 paise over its previous close of 79.86, according to PTI.
Bloomberg showed the rupee was last changing hands at 79.8250 per dollar from its previous close of 79.8150 against the greenback.
What has also the domestic currency has been a solid inflow of foreign capital into Indian assets.
Indeed, since July, foreign portfolio investors have infused over Rs 50,000 crore worth of equities in India, according to the latest National Securities Depository data.
On the other hand, as a result of less risk aversion, the dollar index edged lower to close to 108.40, while Asian currencies gained 0.2 per cent to 0.5 per cent. Asian shares rose on Wednesday after the S&P 500 Index ended a three-day losing run.
Domestic equities gained for the third straight session and were heading toward weekly gains for the sixth week in a row.
Both the equity benchmarks ended Wednesday with marginal gains and extended their fag-end winning streak trend to the second straight day.
A basket of global currencies showed the US dollar edging back from a two-decade high on Thursday as investors anticipated a speech by Fed Chair Jerome Powell the following day for new information on the direction of monetary policy.
Meanwhile, oil prices inched higher in Asian trading, with Brent crude futures climbing to near $102 a barrel. The benchmark is now up more than $10 from the lows witnessed last week.
High commodity prices should keep rupee under pressure, BofA Securities said in a note.
The rupee “should do marginally well” at the open, tracking Asian cues, but oil “will make sure there is not much upside”, a trader at a Mumbai-based bank said.
This week, the rupee has remained rangebound, trading in a band around 20 paisa. Trading in other Asian currencies, however, has been highly erratic as a result of the Chinese central bank’s policy easing and anticipation that the Fed will maintain high interest rates for a longer period of time.
“It is quite evident from the recent price action on the rupee that there is currently no appetite to take it below 80,” the trader said.
Investors will now focus on the Fed Chair Jerome Powell’s address at an event held annually in Jackson Hole, Wyoming on Friday to determine the frequency of upcoming interest rate increases.