Finance
The rupee rose 14 paise to 82.58 (provisional) against the US dollar on Thursday, marking its third consecutive day of gains due to lower crude oil prices and foreign money inflows.
The Indian currency gained 55 paise in the last three sessions, rebounding from an all-time low of 83.11 against the US dollar on Monday.
Media sources attribute the rupee’s sudden rise to the Reserve Bank of India’s decision to prohibit banks from engaging in short-term trading in foreign currency markets.
Investor caution ahead of the BRICS summit and US Federal Reserve Chair Jerome Powell’s address at the Jackson Hole Symposium limited the dollar’s upward rise, even as negative sentiment in domestic equity markets weighed on the Indian currency, according to FX analysts.
At the interbank foreign exchange, the native currency opened strong at 82.55 and fluctuated between 82.36 and 82.61 against the US dollar. It eventually finished at 82.58 (provisional) against the US dollar, up 14 paise from its previous closing.
The rupee rose 27 paise to settle at 82.72 against the dollar on Wednesday, its greatest single-day gain in more than two months. Previously, on June 16, this year, the domestic unit saw the highest intra-day rise of 35 paise.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas said, “Indian rupee gained for the third consecutive day on weakening US dollar and easing crude oil prices. The rupee also gained on reports that the Reserve Bank of India has asked banks not to indulge in short-term trading in the offshore markets.” On Wednesday, the dollar initially gained on disappointing PMI data from the Eurozone and the UK but lost its initial gains on weaker-than-expected manufacturing and services PMI from the US.
Choudhary said the rupee is expected to trade with a “slight positive bias on extended weakness in the US dollar and retreating crude oil prices”. However, weak domestic markets may cap the upside.
“Traders may remain cautious ahead of weekly unemployment claims and durable goods orders data from the US while investors may remain cautious ahead of Fed Chair Jerome Powell’s speech at Jackson Hole Symposium tomorrow. USDINR spot price is expected to trade in a range of Rs 82.20 to Rs 82.85,” he added.
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six currencies, increased 0.20 percent to 103.62.
Brent crude futures rose 0.37 percent to USD 83.52 a barrel, the global oil benchmark.
On the local equities market, the BSE Sensex fell 180.96 points, or 0.28 percent, to 65,252.34. The NSE Nifty fell 57.30 points, or 0.29 percent, to 19,386.70.
According to exchange data, foreign institutional investors (FIIs) emerged net buyers in equities on Wednesday, purchasing shares worth Rs 617 crore.
Source:FE
