The rupee today snapped its two days of losses and edged up two paise to end at 59.27 against the dollar following late selling of the US currency by exporters.
Persistent capital inflows and some weakness in dollar overseas also helped the rupee recover even as government data showed the country’s trade gap in May hit 10-month high levels, say forex dealers.
At the Interbank Foreign Exchange (Forex) market, the rupee commenced lower at 59.32 a dollar from previous close of 59.29. It declined further to a low of 59.37 due to weakness in local equities and initial dollar demand from importers.
“On one hand, concerns surrounding Monsoon and demand for US Dollars from the central bank is applying a floor under the pair and at the same time, strong appetite for Indian assets, debt and equity is capping the upside in the US dollar,” said Anindya Banerjee, currency analyst, Kotak Securities.
The rupee later recovered to a high of 59.22 on fresh dollar demand from exporters before ending at 59.27, notching up a small gain of two paise or 0.03%.
“It was the second straight session where rupee started the session on a weaker note and ended it on a slightly positive note. It has been observed that USDINR pair has been taking a strong support at 59.10 on the daily chart,” said Abhishek Goenka, Founder & CEO, India Forex Advisors.
India’s trade deficit rose to a 10-month high of $ 11.23 billion in May. Trade gap, the difference between earnings from exports and outflow on account of imports, was $ 0.09 billion in the previous month.
Breaking four-sessions of gains, the benchmark S&P BSE Sensex today slipped 109.80 points, or 0.43%.
FIIs had infused Rs 682.26 crore yesterday, as per provisional data with stock exchanges.
Pramit Brahmbhatt, Veracity Group CEO, said: The trading range for the spot USD/INR pair is expected to be within 58.80 to 59.80.”
The dollar index was trading marginally down against its major global rivals.