Rupee Ends Steady at 71.12/USD; Focus on Fed Policy, Union Budget

Mumbai: The rupee on Wednesday ended almost flat at 71.12 against the US dollar as forex traders preferred to sit on the fence while awaiting cues from key upcoming events like US Fed policy and India's Union Budget.

At the Interbank Foreign Exchange, the rupee opened on a weak note at 71.34 then fell further to 71.36 against the US dollar. The local unit, however, recouped most of its initial losses and settled for the day at Rs 71.12, lower by just 1 paisa over its previous close.

During the day, the Indian currency had depreciated by 25 paise to 71.36 against the US dollar but gathered strength towards the fag-end of the session amid increased selling of the greenback by exporters ahead of the outcome of the Federal Open Market Committee (FOMC) meeting and Sino-US trade talks outcome.

On Tuesday, the rupee had settled 1 paisa lower at 71.11 against the US dollar.

"The Indian rupee traded marginally lower today. It remains the second worst performing emerging market currency in last one month," Sanctum Wealth Management Chief Investment Officer Sunil Sharma said.

According to V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, "Emerging market currencies traded right to US dollar as Fed likely to hold the rates as unchanged and outcome from US China trade talks likely to remain positive."

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading largely unchanged at 95.80.

Foreign funds bought shares worth Rs 130.25 crore from the capital markets on a net basis, and domestic institutional investors also purchased shares worth Rs 502.26 crore Wednesday, provisional data showed.

Meanwhile, equity benchmarks Sensex and Nifty Wednesday ended flat as cautious investors refrained from taking any bets ahead of January derivatives expiry, US Fed policy outcome and upcoming Union Budget.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.2442 and for rupee/euro at 81.5380. The reference rate for rupee/British pound was fixed at 93.2867 and for rupee/100 Japanese yen at 65.20.