The rupee depreciated 4 paise to settle at 83.52 (provisional) against the U.S. dollar on Wednesday, weighed down by elevated crude oil prices.
Forex traders said the Indian rupee depreciated on strength in crude oil prices, which touched a two-week high on Tuesday. However, a firm tone in domestic markets and favourable macroeconomic data cushioned the downside.
At the interbank foreign exchange market, the local unit opened at 83.51 and hit the intraday high of 83.49 and a low of 83.56 against the American currency during the session.
It finally settled at 83.52 (provisional) against the dollar, 4 paise lower than its previous close.
On Tuesday, the rupee depreciated 4 paise to settle at 83.48 against the U.S. dollar.
"We expect the rupee to trade with a slight positive bias on softening of the U.S. dollar and rise in global risk sentiments. Strength in the domestic markets may also support sentiments," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas "However, elevated crude oil price and FII outflows may cap sharp upside. Traders may take cues from ADP non-farm employment, weekly unemployment claims, ISM services PMI, Challenger job cuts, trade balance and factory orders data from the U.S. Investors may remain cautious ahead of FOMC meeting minutes," Mr. Choudhary said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10% lower at 105.61.
Brent crude futures, the global oil benchmark, were trading 0.09% higher at $86.32 per barrel.
In the domestic equity market, Sensex hit the historic 80,000-mark and Nifty scaled a fresh lifetime high. The 30-share BSE Sensex finally ended the day 545.35 points, or 0.69%, up at 79,986.80 points. The broader NSE Nifty settled 162.65 points, or 0.67%, higher at 24,286.50 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth ₹2,000.12 crore, according to exchange data.
On the domestic macroeconomic front, India's services sector growth quickened in June from May's five-month low.
The seasonally adjusted HSBC India Services Business Activity Index rose from 60.2 in May to 60.5 in June, pointing to a sharp expansion in output.
