NEW DELHI: The rupee strengthened marginally versus the US dollar on Thursday as optimism of Iran inking a nuclear deal dragged global crude oil prices lower, dealers said.
The domestic currency opened at 74.9400 per US dollar on Thursday as against 75.0250 at the previous close. At 10: 40 am, the rupee had moved in a thin band of 74.88-74.94 against the greenback.
Crude oil for December delivery on the New York Mercantile Exchange fell $1.99 on Wednesday to end the day at $82.66 per barrel, retreating from a seven-year high on Tuesday.
Brent crude oil prices also slipped, with the December contract shedding 2.1 per cent to close at $84.58 on the Ice Futures Europe exchange.
For Indian currency traders, the softening of oil prices comes as a relief on the twin fronts of inflation and the trade deficit, given that the country is the world’s third-largest importer and consumer of the commodity.
A fall in the Dollar Index also gave domestic currency traders reason for cheer, dealers said. The dollar index, which measures the US currency against six major rival currencies was last at 93.83, lower than the 94 touched on Wednesday.
Even as the rupee gained some ground Thursday, investors chose to tread with caution ahead of crucial events lined up, including the US Federal Reserve’s monetary policy statement next week.
The US central bank is widely expected to commence with the process of tapering the massive quantitative easing programme it adopted to shield the economy since the advent of the coronavirus crisis.
“Depending on how hawkish the Fed is, we could head back to the 75.25-75.50/$1 level,” a dealer with a foreign bank said on condition of anonymity.
There is also US GDP data lined up and statements from the European Central Bank and the Bank of England; so all-in-all we expect it to be a rather quiet week till these big events are out of the way, he added.
The local currency may also be supported on Thursday because of likely overseas investments into Indian markets for initial public offerings such as those of Paytm and Nyka, dealers said.