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Commentary

The rupee gained 14 paise to close at 81.94 (provisional) against the US dollar on Thursday, as domestic equity benchmarks scaling all-time high levels and weakness in the American currency overseas boosted investor sentiments. Besides, steady foreign fund inflows into domestic capital markets also supported the local unit, forex

At the interbank foreign exchange market, the local unit opened at 82.05 against the US dollar and settled 12 paise higher at 81.96 (provisional) against the previous close.

During the day, the domestic unit witnessed an intra-day high of 81.97 and a low of 82.05.On Wednesday, the rupee had closed at 82.08 against the dollar.

The rupee traded with a slight positive bias on positive domestic markets and a soft dollar. The domestic equity market touched fresh all-time highs, boosting the domestic currency.

On the domestic equity market front, the 30-share BSE Sensex closed 474.46 points or 0.71 per cent higher at 67,571.90. The broader NSE Nifty rose 146.00 points or 0.74 per cent to 19,979.15.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday as they purchased shares worth Rs 1,165.47 crore, according to exchange data.

International Forex Update

The dollar held mostly steady against the euro and the yen on Thursday, but dropped against the Australian dollar after domestic job data beat expectations, and against the yuan, which received a lift from Chinese monetary authorities.

The dollar is heading for its first weekly gain in nearly a month against a basket of currencies, having made most upward headway against the pound. The pound has lost 2.3% in value this week after data on Wednesday showed UK inflation finally appeared to be cooling.

The euro was last flat on the day at $1.120, as investors looked towards next week's European Central Bank (ECB) policy meeting.ECB policymakers have struck a more dovish tone of late. Governing council member Yannis Stournaras was the latest to signal future rate rises past July's likely 25 basis points increase are up in the air.

The Japanese yen strengthened, leaving the dollar/yen currency pair down 0.2% on the day at 139.44.

AnEvidence of cooler inflation has prompted investor to pare back their expectations for how much more the Bank of England might raise interest rates. A rise above 6% from 5% right now is all but off the cards, according to money markets.The pound was down 0.3% at $1.2905.

Oil prices crept higher on Thursday as a lower-than-expected drop in U.S. crude inventories and a weaker demand outlook kept investors cautious.September Brent futures climbed 6 cents, or 0.1%, to$79.52 a barrel by 0929 GMT, while August U.S. West Texas Intermediate (WTI) crude gained 21 cents, or 0.3%, to $75.56 a barrel.

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