Mumbai: The rupee finally broke out of its two-day consolidative trading range and managed to end higher by 2 paise at 63.58 against the US dollar ahead of the Union Budget. A broadly weaker greenback overseas along with sliding crude also provided a much needed support to the rupee. But, a caution ahead of release of macro-economic data — core sector growth and revised GDP data — kept the sentiment in check and saw the domestic currency falling to fresh one-week low of 63.75 in early trade before the recovery. Dollar selling was also brisk as currency traders started repositioning ahead of the highly anticipated FOMC decision to be announced later during the NY trading session. Though, the overall forex sentiment remained little shaky ahead of the Union Budget 2018 which is expected to strike a fine balance between populism and credible fiscal prudence. The current BJP government will present its fifth and final full-year Budget post GST regime tomorrow and traders will keep an eye on fiscal deficit and borrowing targets for the next fiscal year.
On the international commodity front, crude price fell for the third-straight day after data from an industry body showed global crude stocks rose more than expected last week amid higher US crude oil inventories. Brent crude futures were trading lower at USD 68.55 a barrel in early Asian trading. Meanwhile, domestic equities continued to witness profit-taking as market participants remained on the sidelines ahead of the Union budget tomorrow. The flagship BSE-Sensex dropped 69 points to end at 35,965.02, while Nifty lost 22 points at 11,027.70. Earlier, the Indian unit opened substantially weak at 63.67 compared to overnight close of 63.60 at the Interbank Foreign Exchange (forex) market. Increased month-end dollar demand and fresh foreign fund outflows largely kept trading mood highly volatile, hitting a fresh intra-day low of 63.75. However, the local unit bounced back sharply towards the tail-end session on persistent US dollar selling to touch a high of 63.55 before ending at 63.58, showing a modest gain of 2 paise. The RBI meanwhile fixed the reference rate for the dollar at 63.6878 and for the euro at 79.2149. Globally, the US dollar remained broadly lower against other major currencies as investors remained cautious ahead of the Federal Reserve’s monthly policy decision due later in the day.