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Indian Rupee ends flat at 85.64/$ as high oil prices offset weak dollar
The Indian Rupee ended flat on Wednesday as the surge in crude oil prices capped any positive movements from the weakness in the dollar index.
The domestic currency closed at 85.64, the same level it ended yesterday against the greenback, according to Bloomberg data. The currency has fallen by over 1.3 per cent so far this month, snapping two months of gains.
The Dollar Index showed signs of persistent weakness as it once again fell below the 100 mark, as officials flagged troubles for the economy. The index, which measures the greenback against a basket of six major currencies, was 0.44 per cent lower at 99.66. During the session, the fall dollar value boosted Asian currencies, which rose between 0.1 per cent and 0.4 per cent.
Federal Reserve officials had a cautious tone on the US economic outlook. According to reports, St. Louis Fed President Alberto Musalem cautioned that the US labour market may weaken and prices could rise, a concern echoed by Atlanta Fed President Raphael Bostic. The 10-year treasury yield climbed back to the 4.50 per cent level, while short-maturity yields were broadly unchanged.
Crude oil prices rose after reports emerged that Israel is preparing for a potential strike on Iranian nuclear facilities. Brent crude price was up 1.04 per cent to $66.06 per barrel, while WTI crude prices were 1.16 per cent higher at 62.75, as of 3:40 PM IST.
Firm global crude oil prices intensified the downside pressure on the currency, according to Amit Pabari, managing director at CR Forex Advisors. The latest geopolitical developments may cause a tick-up in oil prices, which can cause the rupee to be in pressure, he said.
Technically, the dollar-rupee pair is expected to face strong resistance near 85.60-85.80 levels while 85.20 will act as a strong support, Pabari said.
Meanwhile, Investors will closely monitor any further selling by foreign portfolio investors following their sale of equities worth ₹10,016.1 crore in the cash market on Tuesday.
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