Rupee gains 11 paise to 95.17 against dollar after Fed holds interest rates

Rupee strengthens against US dollar

NEW DELHI: Rupee strengthened against the US dollar in early trade on Thursday, rising 11 paise to 95.17 after the American currency softened following the US Federal Reserve's latest policy decision.

The currency opened at 95.20 at the interbank foreign exchange market before moving higher. It had settled at 95.28 against the dollar in the previous session.The US central bank kept its interest rates unchanged in the 3.75 per cent–4.00 per cent range, as expected. Despite the widely anticipated decision, the market response was mildly negative for the dollar, forex traders said.The rupee continues to face pressure from elevated crude oil prices and firm US yields.

However, foreign exchange reserves of around $721 billion, a recent improvement in portfolio flows and the Reserve Bank of India's presence in the market are providing support to the currency."We therefore see a gradual upward bias in USD-INR within the range, rather than evidence of a disorderly move," Anindya Banerjee, head of commodity and currency research, Kotak NEO told PTI.Markets are now closely watching incoming economic data following the Fed's decision to hold rates steady.

Stronger inflation figures could reinforce expectations of a rate hike in December, whereas softer numbers could offer relief to bullion and emerging-market currencies.The dollar index, which tracks the US currency against a basket of six currencies, slipped 0.04 per cent to 102.15. Brent crude futures, meanwhile, fell 1.03 per cent to $114.13 per barrel.Domestic equities also traded higher in early deals on Thursday. BSE Sensex advanced over 550 points to 73,409.06, while NSE Nifty50 climbed above the 22,730 points. On the investment front, Foreign Institutional Investors (FIIs) were net buyers of Indian equities worth Rs 871.83 crore on Wednesday, exchange data showed.