Rupee rises 4 paise to close at 83.89 against US dollar, Powell speech in focus

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 percent lower at 101.40.

The rupee traded in a narrow range and settled higher by four paise at 83.89 (provisional) against the American currency on August 23, as traders remained cautious ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium.

Forex traders said weak US Dollar, foreign fund inflows and a positive tone in the domestic markets supported the rupee. However, overnight gains in crude oil prices capped sharp gains.

At the interbank foreign exchange market, the local unit opened weak at 83.93 and touched an intraday high of 83.85 against the US dollar.

The domestic currency finally settled at 83.89 (provisional), 4 paise higher from its previous close.

On August 22, the rupee traded in a narrow range and settled lower by 3 paise at 83.93 against the American currency.

"We expect the rupee to trade with a slight negative bias as traders remain cautious ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium which could provide some cues on Fed's path to cut interest rates.

"Weak US and Asian markets and a recovery in crude oil prices may pressure the rupee while positive domestic markets may support the rupee at lower levels," said Anuj Choudhary -- Research Analyst at Sharekhan by BNP Paribas.

Fed Chair Jerome Powell’s keynote speech on Friday at 10 a.m. New York time will garner the most interest. With the Fed on the cusp of lowering borrowing costs from a more than two-decade high, Powell’s comments will be closely scanned for any kind of signal about the timing, size and pace of interest-rate cuts. Any remarks that offer insight into his views on the labor market, and how risks of further weakness stack up against inflation concerns, will also be looked at.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 percent lower at 101.40.

Brent crude, the global oil benchmark, advanced 1.05 percent to USD 78.03 per barrel.

On the domestic equity market front, Sensex advanced 33.02 points, or 0.04 percent, to close at 81,086.21 points. The Nifty rose 11.65 points, or 0.05 percent, to 24,823.15 points.

Foreign institutional investors (FIIs) were net buyers in the capital markets on August 22 as they purchased shares worth Rs 1,371.79 crore, according to exchange data.

On the domestic macroeconomic front, the minutes of the last Monetary Policy Committee (MPC) released by the Reserve Bank of India (RBI) on Thursday noted that the calibrated increase in policy repo rate by 250 basis points since May 2022 and subsequent change of stance to the withdrawal of accommodation have facilitated gradual disinflation over 2022-23.

According to RBI Governor Shaktikanta Das, the current policy rate of 6.5 percent is broadly balanced, and any justification for policy easing at this juncture can be misleading.

(With PTI and Bloomberg inputs)