Rupee gains 6 paise to 64.27 vs USD ahead of Fed meet outcome

Mumbai: The rupee on Wednesday logged its first gain in three sessions by rising 6 paise to 64.27 against the US currency owing to fresh dollar unwinding by exporters.

An air of caution swept across the forex market during trading and witnessed high amount of volatility heading into the key Federal Reserve policy decision.

Though, the central bank is widely expected to leave interest rates untouched.

The home currency plunged sharply to hit a low of 64.43 in mid-morning session on heavy dollar demand before recuperating losses.

Heavy dollar outflows from local equities remained unabated as foreign investors pared their holdings, added some extra pressure in early trade.

Foreign portfolio investors (FPIs) sold shares worth Rs 1,719.62 crore yesterday, as per provisional data released by the stock exchanges.

Meanwhile, dull trading continued for the second consecutive day on domestic bourses, failing to capture the momentum from another record close in New York overnight as market participants refrained from taking positions ahead of the much awaited Fed's monetary policy announcement.

Geo-political issues returned after US President Donald Trump, in his speech to UN General Assembly, threatened to "totally destroy" North Korea if it persists with its ballistic missile and nuclear programme.

The benchmark Sensex settled flat at 32,400.51, while Nifty shed over 6 points to 10,141.15.

Rebounding from its nearly two-month low, the home currency resumed higher at 64.25 as against Tuesday's close of 64.33 at the Interbank Foreign Exchange (forex) market on fresh bouts of dollar selling by exporters and banks.

However, quickly reverting an early spike, the local unit hit an intra-day low of 64.43 due to intense dollar pressure before recovering magnificently towards the fag-end trade.

It finally settled the day at 64.27, showing 6 paise gains, or 0.09 percent.

The rupee had lost 25 paise in last two days.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.3637 and for the euro at 77.2493.

The dollar remained broadly lower against major trading rivals. The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 91.53.

In cross-currency trades, the rupee continued to rule weak against the pound sterling and settled at 86.99 from 86.81 per pound and fell back against the euro to finish at 77.12 from 76.98 earlier.

It also drifted against the Japanese yen to conclude at 57.73 per 100 yens from 57.70 yesterday.

Forward market rates not received from sources.

Elsewhere, the euro remains supported and hit a new high against the greenback in early Wednesday's trading, extension of past four days recovery rally, while pound sterling is up sharply after UK retail sales data unexpectedly rebounded in the month of August, with the core readings more than doubling market expectations.

Yen settled to a consolidation mode against US dollar after its three-day winning streak amid a risk-on backdrop in global financial markets ahead of BoJ policy announcements, due tomorrow.

On the International energy front, crude prices rose on Wednesday after Iraq's oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in US inventories.

US West Texas Intermediate (WTI) crude futures were up 33 cents, or 0.7 percent, at USD 49.81 a barrel in early Asian trade. Brent crude futures climbed 23 cents, or 0.4 percent, to USD 55.37.