Indian rupee, the domestic currency benchmark, opened on a flat note and later gained by 5 paise to 73.28 per US dollar
aided by the gains in the domestic equity markets and weak American currency. Continued FII inflows in the capital market segment also kept sentiments optimistic.
Although, traders said gains were checked as investors turned cautious ahead of the RBI Monetary Policy Committee (MPC) decision on Friday.
The rupee was trading in a narrow range today at the interbank forex market. The local unit later gained some ground and touched 73.28, up 5 paise from its previous close of 73.33 per dollar.
The Reserve Bank of India's Monetary Policy Committee (MPC) meet is scheduled during 7 to 9 October 2020. RBI is expected to keep key interest rates unchanged to maintain low inflation amid the pandemic induced recession. Investors will also be keenly awaiting the central bank's guidance on how the economy is performing amid the coronavirus pandemic.
Meanwhile, US dollar, fell 0.05 per cent to 93.58 as focus changed towards a possibility of stimulus plan. FOMC minutes showed officials' concerns over economic recovery as lack of White House fiscal aid. Fed policymakers said their economic outlook assumed additional fiscal support, according to U.S. Federal Reserve minutes released on Wednesday.
Worldwide, there were 363 lakh confirmed cases and 10.6 lakh deaths from COVID-19 outbreak. India's COVID-19 caseload breached the 68-lakh mark and the death toll from COVID-19 infections rose to 10.5 lakh, as of today.
On the domestic equity front, market indices traded majorly bullish, amid positive global equities. Extending gains for the six straight day, the 30-share benchmark BSE Sensex gained 550 points higher at 40,402 and NSE Nifty50 index gained 143 points to 11,882.
Foreign portfolio investors (FPIs) bought shares worth Rs 1,093.81 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 1,129.49 crore in the Indian equity market on 7 October, provisional data showed.
Anuj Gupta - DVP- Commodities and Currencies Research, Angel Broking said, "Yesterday, NSE USDINR OCT contract appreciated by 0.15 percent and closed at 73.46 levels while the Dollar Index decreased by 0.1 percent. India's services sector, hit severely due to the over two-month long pandemic-induced lockdown, neared recovery in September, with the PMI for services rising to 49.8 from 41.8 in August. US Federal Reserve Chairman Jerome Powell called for continued aggressive fiscal and monetary stimulus for an economic recovery that he said still has a long way to go.
On today's technical outlook, he added," As of today traders can go for sell in NSE USDINR Oct contract at 73.50, with the stop loss of 73.70 and for the target of 73.10 to 72.90 levels. We are expecting appreciation in USDINR in short term and it may test 72.50 levels soon.
"While the natural tendency for the rupee is to strengthen in the backdrop of a weak US dollar globally, nationalised banks likely on behalf of the Reserve Bank buy the dips to around 73.10 aggressively," said Abhishek Goenka, Founder and CEO, IFA Global.
Goenka further added "we are likely to see another quiet, range bound session ahead of the MPC decision on Friday".
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