Rupee rises 11 paise to settle at 83.65 against US dollar

     Mumbai, Sep 19 (PTI) The rupee strengthened by 11 paise to hit its two-month high level of 83.65 against the US dollar on Thursday after the US Federal Reserve cut the benchmark interest rate by 0.50 per cent, boosting investors' sentiment.
     Forex traders said the initial gains in the American currency post Fed's announcement failed to resist recessionary fear in the world's largest economy.
     Moreover, an upward movement in the crude oil prices, capped the rise in the local unit, they added.
     At the interbank foreign exchange market, the Indian currency opened at 83.70 and touched the intra-day high of 83.56 against the greenback. During the session, it touched the lowest level of 83.73 against the dollar.
     The unit finally settled at 83.65 against the American currency, registering a gain of 11 paise from its previous closing.
     On Tuesday, the local unit had gained 10 paise to settle at 83.76 against the US dollar.
     The Forex market was closed on Wednesday due to a holiday declared by the Maharashtra government.
     Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee gained on Thursday and traded at a two-month high as domestic equities touched fresh all-time highs after a 50 basis points rate cut announced by the US Federal Reserve.
     The rupee is expected to trade with a slight positive bias on firm tone in the domestic markets and rising expectations that an aggressive 50-bps rate cut by the Fed may attract fresh FII inflows.
     "Overall weakness in the US dollar may also support the rupee. However, a positive tone in crude oil prices may cap sharp upside, he said, adding, "USD-INR spot price is expected to trade in a range of 83.40 to 83.80."
     Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.41 per cent to 101.01.
     Brent crude, the international benchmark, advanced 1.15 per cent to USD 74.50 per barrel in futures trade.
     According to Maneesh Sharma, AVP - Commodities & Currencies, Anand Rathi Shares and Stock Brokers, the appreciation in the rupee was mainly due to rising interest rate differentials with the US due to 50 bps cut in the US benchmark rate.
     However, further rebound in crude oil prices seen post Fed rate decision may limit the downside amid investors awaiting the US weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Existing Home Sales, to gauge further direction in dollar index.
     In the domestic equity market, the 30-share BSE Sensex climbed 236.57 points, or 0.29 per cent, to a fresh peak of 83,184.80, while the Nifty rose 38.25 points, or 0.15 per cent, to 25,415.80.
     Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, as they offloaded shares worth Rs 2,547.53 crore, according to exchange data.
     The latest government data released on Wednesday showed net direct tax collection grew 16.12 per cent to over Rs 9.95 lakh crore so far this fiscal on higher advance tax mop-up.

(This story has not been edited by THE WEEK and is auto-generated from PTI)