Rupee firms up against US dollar at 66.64

The domestic unit has gained 26 paise in the last four trading sessions. It had ended steady yesterday.

Fresh bouts of dollar selling by local corporates and exporters along with growing expectations of more foreign fund inflows largely kept forex traders interested.

The currency market has been lacklustre and witnessed a very narrow momentum throughout the day despite expected monetary policy decision from the US Federal Reserve.

Meanwhile, the US dollar lost further momentum and remained under pressure in the aftermath of the Fed decision which was not as hawkish as expected, but confirmed its gradual path of policy normalisation indicating the June rate hike.

The Fed kept its benchmark interest rate unchanged at 1.5 per cent to 1.75 per cent last night, but noted that inflation was nearing its 2 per cent target rate after years of remaining undesirably low.

After testing fresh 14-month lows of 66.91 last week, the rupee has shown remarkable stability in the last few trading sessions, a forex dealer said.

On the global energy front, crude lost further ground on the back of swelling US crude inventories and record weekly US production that undermined efforts by OPEC to cut supplies.

Brent crude, an international benchmark, was trading lower at USD 72.98 a barrel in early Asian trade.

The rupee opened modestly higher at 66.63 as compared to Wednesday's close of 66.66 at the inter-bank foreign exchange (forex) market on fresh bouts of dollar unwinding by banks and exporters.

After trading in a tight range of 66.52 and 66.65, the home unit finally settled down at 66.64, showing a small gain of 2 paise, or 0.03 per cent.

The RBI, meanwhile, fixed the reference rate for the dollar at 66.6093 and for the euro at 79.8579.

Meanwhile, local bourses succumbed to modest profit taking in select heavyweight counters as investors turned little cautious due to rich valuations after a recent run-up to multi-month highs amid subdued global cues.

Asian stocks were mostly lower Wednesday as investors looked with some caution to the US Federal Reserve's monetary policy call.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 92.24.

In the cross-currency trade, the rupee continued its bullish trend against the pound sterling to finish at 90.51 from 90.90 and also strengthened against the euro to end at 79.80 as compared to 79.97 earlier.

The local currency, however, fell back against the Japanese yen to close at 60.97 per 100 yens from 60.70 yesterday.

Elsewhere, the euro, drifted back after a brief recovery against the US dollar following disappointing Eurozone inflation figures which came in below estimates at 1.2 per cent in April, missing expectations, while, the core figures eased to 0.7 per cent in the reported month.

The pound sterling, however, maintained its uptrend for the second day despite the disappointing results from UK's Services PMI, further undermining the possibility of a rate hike by the Bank of England at the next meeting.

In forward market today, premium for dollar declined owing to mild receiving from exporters.

The benchmark six-month forward premium payable in September eased to 103.75-105.75 paise from 105.50-107.50 paise and the far-forward February 2019 contract also moved down to 233-235 paise from 235.50-237.50 paise previously.