A stable dollar will at minimum reduce incremental cross-currency pain for Indian cos.
The Reserve Bank's rate-setting panel will start its 3-day deliberations on Wednesday amid expectations of yet another rate hike of 50 basis points to check high inflation, in line with similar actions taken by other major central banks, including the US Fed. Based on the recommendations of the Monetary Policy Committee (MPC), the RBI had effected 50 basis points increase in repo rate each in June and August after raising the short-term lending rate by 40 basis points in an off-cycle decision in May. The MPC, headed by RBI Governor Shaktikanta Das, is scheduled to meet during September 28-30.
There was sustained selling of the American currency by exporters ahead of a decision of US Federal Reserve on tapering its monetary stimulus.
The rupee ended almost flat against the dollar.
The price rise of essential food items like vegetables, fruits and cereals, pushed up inflation to five-month high of 6.01 per cent in May.
The rupee on Monday appreciated by 11 paise to 54.64 against the US dollar in early trade at the Interbank Foreign Exchange, aided by selling of the American currency by exporters and banks.
Axis Bank was the top gainer in the Sensex pack, surging around 5 per cent, followed by HDFC twins, ICICI Bank, Bajaj Finance and SBI. NSE Nifty zoomed 274.20 points to end at 14,982.
The Sensex and Nifty spiralled lower for the fourth session on the trot on Wednesday as investors remained on edge ahead of US inflation data, which will give clues on the Federal Reserve's policy tightening trajectory. Unabated selling by foreign institutional investors and a jump in crude prices also weighed on sentiment, traders said. Despite a firm start, the 30-share BSE Sensex failed to carry forward the momentum and ended at 54,088.39, lower by 276.46 points or 0.51 per cent. During the day, it tumbled 845.55 points to 53,519.30.
The local currency moved in a range of 59.80 and 60.05 per dollar during the morning trade.
A sluggish dollar movement in overseas markets and continued capital inflows restricted the rupee fall to a major extent, forex dealers said.
Indian stocks and the rupee have benefitted from dollar liquidity induced by the US Fed stimulus.
The domestic unit had lost 9 paise to close at fresh two-and-a-half-month low of Rs 55.21 per dollar in the previous session on continued dollar demand from importers.
The dollar index was last trading up by 0.04 per cent against a basket of six major global rivals.
The domestic unit hovered in a range of 66.45 and 66.61 per dollar during the day.
The rupee had gained by 57 paise, or 1.04 per cent, in previous two days.
Forex dealers say dollar rose against the euro after the European Union cut its economic growth forecast.
The rupee fell because of fresh demand for dollar from importers.
The US dollar jumped in overseas market on Wednesday.
Fresh dollar demand from importers and some banks on the back of smart rise in the US dollar ahead of RBI monetary policy meeting on Tuesday also weighed on the rupee, said forex dealers.
The rupee fell back sharply against the pound sterling at 83.28 from Monday's close of 82.49 and also reacted downwards against the euro to 71.59 from 71.29.
On Tuesday, the rupee lost 9 paise to close at 66.67 against the US dollar.
Dollar selling by exporters and banks also supported the rupee, forex dealers said.
The rupee resumed lower at 54.37 per dollar as against the last closing level of 54.07 at the Interbank Foreign Exchange Market.
Besides, a higher opening in the domestic equity market supported the rupee but yen's weakness against the dollar overseas capped the rupee's gains, dealers said.
The rupee resumed higher at 53.26 per dollar.
Weak dollar in the overseas market also boosted the rupee value against the dollar, a forex dealer said.
Foreign institutional investors pumped in nearly $167.35 million (Rs 899.83 crore) into the local stock markets on Tuesday, according to the BSE provisional data.
The rupee had strengthened by 20 paise to close at 55.11 against dollar in Tuesday's trade on fresh selling of US currency by exporters.
A higher opening in the domestic equity market and the strengthening of euro and yen against the dollar overseas also aided the rupee, dealers said.
In New York market, the US dollar pared losses on Wednesday amid reports that cut into optimism that Washington lawmakers are close to a deal to avoid going over the fiscal cliff.
Continuing its fall for the sixth consecutive day, the Indian rupee on Monday depreciated by 43 paise against the greenback in opening trade
There was mild selling of dollars by banks and exporters
The rupee had tumbled by 30 paise to close at two-and-a-half-month low of 55.51 against the dollar in the previous session on Friday on sustained demand for the dollar from importers and banks.
The local currency, which had plunged to an all-time low of 55.39 on Tuesday, crashed to 55.82 at the Interbank Foreign Exchange market in early trade.
The rupee had plunged to close at its fresh two-year low of 66.84 against the dollar by falling 11 paise in Tuesday's trade.
Sustained dollar sales by exporters and banks and a higher opening in the equity market also boosted the rupee sentiment, forex dealers said.
The dollar index was down by 0.23 per cent against a basket of six major rivals after the US Federal Reserve continued to express concern about the economy and made no changes to its ultra-easy monetary policies.
The rupee on Monday appreciated by 9 paise to 53.75 against the US dollar in early trade at the Interbank Foreign Exchange on selling of the American currency by exporters and banks.
The rupee had gained 11 paise to close at a fresh over 18-week high of 53.36 against the dollar in the previous session.
The rupee lost 2 paise to end at 53.47 against the dollar in Monday's session on heavy month-end dollar demand from importers and weakness in equities.
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