Rupee gains 32 paise to 80.98 against US dollar in early trade

The rupee appreciated 32 paise to 80.98 against the US dollar in early trade on Thursday on a broad dollar weakness after Federal Reserve Chairman Jerome Powell said the pace of interest rate hikes may slow.

At the interbank foreign exchange, the domestic unit opened at 81.08 against the dollar, then gained further ground to touch 80.98, registering a rise of 32 paise over its previous close.

On Wednesday, the rupee rose by 42 paise to close at 81.30 against the US dollar, on month-end exporter dollar selling and MSCI rebalancing related inflows.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.27 percent to 105.66.

Fed Chair Powell in his speech on Wednesday gave a clear indication that the Fed would slow down its pace of rate hikes and increase rates by 50 basis points in the December policy.

Overall, the speech can be said to be leaning towards moderation in hawkishness going forward and this has brought a great sense of comfort to markets, IFA Global Research Academy said in a research note.

"Rupee has strengthened offshore post Powell's speech. It is likely to...trade in a range of 80.90-81.30 with appreciation bias," the note added.

Brent crude futures, the global oil benchmark, advanced 2.89 per cent to USD 85.43 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 432.09 points or 0.68 per cent higher at 63,531.74. The broader NSE Nifty rose 118.15 points or 0.63 per cent to 18,876.50.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday as they purchased shares worth Rs 9,010.41 crore, according to exchange data.

ICICI Direct, which is part of ICICI Securities, expects the Rupee to appreciate towards 80 levels by the end of this fiscal year 2022-23 ending March.

"We won't be surprised even if it breaks the major support level of 80 and appreciates further till 79.00 as well. We believe, the rupee may face a strong resistance near 83.50," Raj Deepak Singh, Analyst - F&O, Currency and Commodity at ICICI Direct had said.

With inputs from Agencies.