Rupee jumps 53 paisa and closes 1-month high on FII entries

Continued inflows of foreign funds into capital markets, lower crude oil prices and weak US dollar in global markets are boosting the local currency

Continued inflows of foreign funds into capital markets, lower crude oil prices and weak US dollar in global markets are boosting the local currency

The rupee gained 53 paise – its best single-day gain in more than 11 months – to close on Tuesday at a more than a month high of 78.53 against the US dollar.

Continued inflows of foreign funds into capital markets, lower crude oil prices and weak US dollar in global markets boosted the local currency.

The rupiah, which fell to an all-time low of 80.06 last month, has rallied spiritedly over the past four sessions as FIIs returned to capital markets and crude oil prices fell below the $100 per barrel mark.

Heightened risk appetite on hopes of a slowdown in US Federal Reserve tightening also boosted Rupee sentiment.

The rupee gained 138 paise or 1.73% against the US dollar in the four days to Tuesday to regain the 78 level.

In the interbank FX market, the local unit opened strong at 78.96 against the greenback and saw an intraday high of 78.49 and a low of 78.96 on Tuesday.

It eventually closed at 78.53 against the US currency, up 53 paise from its previous close. The rupee had closed near this level on June 27th.

In the previous session, the Rupee closed at 79.06 against the US Dollar.

“The Rupee gained strongly above 78.50 due to weakness in the Dollar Index and Crude prices falling below $95 in WTI. The range of the rupee can be observed between 78.45 and 78.85”, Jateen Trivedi, VP Research Analyst at LKP Securities.

The Indian rupee hit four-week highs, after seven months of successive declines, as there was a clear shift in sentiment, and investors no longer seek the safety of the US dollar, leading to further inflows into domestic markets. , Sugandha Sachdeva, Vice President – Commodities and Currency Research, Religare Broking Ltd., said.

“That was largely the tone of the Fed Chairman, where he sounded less hawkish and indicated a slow pace of tightening that improved risk appetite in the markets. In addition, there were signs visible signs of exhaustion in the dollar index around the 109 mark which prompted a sell-off in the greenback, while helping the recovery of the Indian rupee,” Ms. Sachdeva added.

A drop in crude prices below $100 a barrel, amid weaker demand as well as a ramp-up in Libyan production, further eased concerns over a widening current account deficit .

“The focus is now on three key events scheduled for the week – the OPEC+ meeting, the RBI monetary policy outcome and the US employment report which will provide new clues and dictate the trend of the national currency,” Ms. Sachdeva noted.

“Unexpectedly, the Indian rupee and equities outperformed in the region as foreign institutions became net buyers of equities and debt. rupee gains,” said Dilip Parmar, Research Analyst, HDFC Securities.

Going forward, the bias remains to the downside as the pair closes below the 50-day simple moving average and a level below 78.50 will give way to 77.60. “However, their position needs to be adjusted based on geopolitical updates from the United States and China,” he added.

On the domestic stock market front, the BSE Sensex ended up 20.86 points, or 0.04% higher at 58,136.36, while the broader NSE Nifty was up 5.40 points, or 0.03%, to 17,345.45.

Brent futures, the global oil benchmark, fell 0.38% to $99.65 a barrel.

The dollar index, which measures the strength of the greenback against a basket of six currencies, rose 0.10% to 105.55.

Foreign institutional investors were net buyers in the capital market on Tuesday, buying shares worth ₹825 crore, according to exchange data.

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