Mumbai: The rupee snapped its three-day losing streak and settled for the day higher by 50 paise at 85.45 against the US dollar on Friday, on a sharp fall in the dollar index and surge in domestic equities, amid rise in risk appetite for riskier assets. Forex traders said, the rupee which had lost 53 paise in the last three trading sessions, settled with significant gains on Friday largely supported by the weakness of the American currency in the overseas market.
However, a slight recovery in crude oil prices and foreign fund outflows capped the appreciation bias in the local unit to some extent. At the interbank foreign exchange market, the rupee witnessed heavy volatility. It opened at 85.95 then touched an intra-day high of 85.11 and a low of 86.10 against the US dollar.
The domestic unit settled for the day at 85.45, higher by 50 paise over its previous close. On Thursday, the rupee depreciated 36 paise to close at 85.95 against the US dollar.
“We expect the rupee to trade with a positive bias on underlying weakness in the US dollar index and improved global risk sentiments. However, selling pressure from foreign investors may cap sharp upside movement,” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
Choudhary further noted that traders may take cues from existing home sales data from the US. “USD-INR spot price is expected to trade in a range of 85 to 85.70,” he said. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.60 per cent at 99.36, on rise in risk appetite in global markets and strength in riskier currencies. Easing of US treasury yields also pressurised the greenback.
Dilip Parmar, Senior Research Analyst, HDFC Securities, said the rupee experienced its most significant single-day gain since November 11, 2022. “This upward movement was primarily fuelled by a weaker US dollar and a strong performance in the domestic equity market. Additionally, the central bank’s efforts to encourage foreign investment in corporate bonds, providing short-duration liquidity, further bolstered the rupee’s appreciation. Looking ahead, the spot USD-INR is expected to find support at 84.94 and face resistance at 86.15,” he added.
Brent crude, the global oil benchmark, fell 0.22 per cent to USD 64.30 per barrel in futures trade. In the domestic equity market, the 30-share BSE Sensex advanced 769.09 points, or 0.95 per cent, to close at 81,721.08, while the Nifty rose 243.45 points, or 0.99 per cent, to 24,853.15.
Foreign institutional investors (FIIs) purchased equities worth Rs 1,794.59 crore on a net basis on Friday, according to exchange data. India’s forex reserves dropped USD 4.888 billion to USD 685.729 billion for the week ended May 16, the Reserve Bank of India said on Friday.
The weakness of the US Dollar in overseas market, helped the rupee, which had lost 53 paise in the last three trading sessions, to end Friday with significant gains. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
