Rupee extends gains against US dollar

The rupee today firmed up by a modest two paise to end at 64.94 against the US currency in a quiet trade on mild dollar selling by banks and exporters in the face of subdued overseas sentiment.

Forex market sentiment remained cautious as participants preferred to stay on the sidelines while awaiting cues from US President Donald Trump's diplomatic tour of Asia.

Heavy offloading by foreign portfolio investors and funds also weighed on the trading front as they sold shares worth a net Rs 3,838.27 crore yesterday.

Domestic equity markets showed some stability after a two-day selloff and managed to end in a positive terrain ahead of the outcome of the GST Council meet tomorrow.

The BSE Sensex recovered 32 points to settle at 33,250.93, while Nifty added 5.80 points at 10,308.95.

In the meantime, crude prices seesawed as conflicting catalysts stoked volatility on the back EIA inventory data.

At the Interbank Foreign Exchange (FOREX), the rupee opened a tad higher at 64.95 from overnight close of 64.96 with lack of catalysts for strong momentum buying.

After trading in a narrow range of 64.85 and 65.00 most part of the session, the local unit eventually ended at 64.94, showing a small gain of 2 paise.

The rupee ended higher by 7 paise yesterday after a twosession fall.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.8967 and for the euro at 75.3061.

On the global front, the greenback slipped lower against other major currencies as uncertainty over the fate of a major US tax reform bill continued to weigh.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 94.47 in early trade.

In cross-currency trades, the rupee strengthened against the Pound sterling to settle at 85.14 from 85.28 per pound.

The home currency, however, continued to decline against the Japanese yen to finish at 57.31 per 100 yens from 57.21 and also dropped further against the euro to close at 75.53 from 75.35 yesterday.

Elsewhere, European forex market witnessed lacklustre activity and remained relatively uneventful ahead of Brexit talks and also autumn economic forecast from European Commission later in the day.

In forward market today, premium for dollar drifted further due to sustained receiving from exporters.

The benchmark six-month premium payable in April declined to 132-134 paise from 135-137 paise and the far forward October 2018 contract moved down to 272-274 paise from 275-277 paise on Wednesday.

On the international energy front, crude prices held steady after falling late in the previous session in the face of higher US supplies and some indicators of a demand slowdown, though fall was capped, supported by ongoing supply cuts led by OPEC and Russia.

Brent futures were at USD 63.66 per barrel, up 17 cents, or 0.3 per cent, from their last close.

US West Texas Intermediate (WTI) crude was at USD 56.92 per barrel, up 11 cents, or 0.2 percent.