Mumbai, Apr 15 (PTI) The rupee pared initial gains to settle 9 paise lower at 93.44 (provisional) against the US dollar on Wednesday, as rising crude oil prices after a sharp fall and higher domestic inflation
data dampened sentiment.
According to forex analysts, strong buying in domestic equities failed to support the rupee even as it gained initially after US President Donald Trump said that a second round of talks with Iran could be held "over the next two days".
At the interbank foreign exchange market, the rupee opened at 93.19 and touched the intraday high of 93.13 against the greenback. It finally settled at the day's lowest level of 93.44 (provisional) against the American currency, registering a fall of 9 paise from the previous closing level.
On Monday, the rupee weakened by 52 paise to settle at 93.35 against the US dollar. The forex market was closed on Tuesday on account of Baba Saheb Ambedkar Jayanti.
Government data released on Wednesday showed that the Wholesale Price Index (WPI)-based inflation rose sharply to an over 3-year high of 3.88 per cent in March, driven by a sharp spike in rates of fuel, power and manufactured items amid the West Asia crisis.
Consumer price index-based retail inflation rose 3.4 per cent in March compared to 3.21 per cent in the preceding month, mainly due to an uptick in certain food items, data released earlier this week showed.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said, "The currency continues to remain highly sensitive to developments around the Strait of Hormuz, which remains a key risk factor for global oil supply. In the near term, the rupee is expected to trade in a range of 93.10–93.65, with direction dependent on further geopolitical developments and oil price movement".
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was marginally higher by 0.05 per cent at 97.95.
Brent crude, the global oil benchmark, was trading 1.50 per cent up at USD 96.21 per barrel in futures trade.
On the domestic equity market front, the 30-share Sensex jumped 1,263.67 points, or 1.64 per cent, to settle at 78,111.24, while the Nifty climbed 388.65 points, or 1.63 per cent, to 24,231.30.
Foreign Institutional Investors were net sellers on Monday and offloaded equities worth Rs 1,983.18 crore, according to exchange data. PTI HVA BAL
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