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Rupee depreciated by 18 paise to close at 85.50 (provisional) against the US dollar on Thursday, pressured by increased demand for the American currency from importers and foreign fund outflows.

Forex traders attributed the rupee’s decline to strong dollar demand. However, gains in domestic markets and a drop in crude oil prices helped limit the fall. At the interbank foreign exchange, the rupee opened at 85.53 and traded in a range of 85.48 to 85.73 before settling at 85.50, down 18 paise from the previous close.

On Wednesday, the rupee had pared most of its early gains to end 4 paise higher at 85.32 against the dollar. Over the past two sessions, the rupee started bullish but gave up most gains, closing with marginal increases. After a firm start, it rose near 84.62 on Tuesday and 85.05 on Wednesday but lost momentum during trading.

Also Read:Currency Market News: Rupee rises 31 paise to 85.05 vs US dollar

Looking ahead, Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said, "we expect the rupee to trade with a positive bias amid positive domestic markets and rise in risk appetite in global markets. Easing geopolitical tensions between India and Pakistan and easing trade tariff tensions between the US and China may also support the rupee."

He added, "Traders may take cues from PPI, retail sales, Empire State manufacturing index, industrial production and weekly unemployment claims data from the US," noting that USDINR spot price is expected to trade in a range of 85.20 to 85.90.

The dollar index, which measures the greenback’s strength against a basket of six currencies, was down 0.28 per cent at 100.75. Brent crude oil futures fell 3.72 per cent to $63.63 per barrel. Forex traders said investors are closely watching US Federal Reserve Chair Jerome Powell’s speech on Thursday for signals on the central bank’s monetary policy stance.

Also Read: Final Trade: Bulls back in charge; Sensex gains 1,200 pts, Nifty closes at 25,062

Indian equity markets closed sharply higher on May 15, buoyed by a strong afternoon rally. The Nifty surged past the 25,000 mark for the first time, finishing at 25,062.10, up 395 points or 1.6 per cent. The Sensex climbed 1,200 points or 1.48 per cent to end at 82,530.74.

Hero MotoCorp, JSW Steel, Trent, Tata Motors, and HCL Tech led the gains on the Nifty. The broader market also showed strength with 2,511 stocks advancing against 1,302 declining.

Foreign institutional investors (FIIs) were net buyers of equities worth Rs 931.80 crore on Wednesday, according to exchange data.

(With inputs from PTI)

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