Rupee recovers from record low, jumps 12 paise to $ 78.10 per US dollar
Highlight
- Rupee closes 12 paise higher at 78.10 from its record low against the US dollar
- Dollar index fell 75 basis points from its high
- Global oil benchmark Brent crude futures slipped 0.25 per cent to $118.21 per barrel
The rupee on Thursday closed 12 paise higher at 78.10 against the US currency, tracking an overnight weakness in the dollar and fall in crude oil prices. Traders said the dollar index fell from its highs after the Federal Reserve raised interest rates by 75 basis points in a historic move to fight inflation and forecast a slowing economy and rising unemployment in the coming months.
In the interbank forex market, the rupee opened at 78.06 against the greenback and moved in a narrow range of 78 to 78.12. It finally closed at 78.10, which is 12 paise higher than the previous close. On Wednesday, the rupee had closed 18 paise lower at its fresh life level of 78.22. The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.13 per cent to 105.02.
Global oil benchmark Brent crude futures slipped 0.25 per cent to $118.21 a barrel. Dilip Parmar, Research Analyst, HDFC Securities, said, “Despite widening trade deficit, weak regional currencies and risk aversion sentiments, fall in crude oil prices supported the rupee. According to government data released on Wednesday, India’s merchandise exports rose 20.55 percent to $38.94 billion in May, while the trade deficit widened to a record $24.29 billion.
Parmar further said that there is a possibility of some relief rally in the rupee in the near term, but the chances of 78.50 are very much alive. “As soon as the FOMC event is over, the focus will shift back to fund inflows and risk mood for rupee movement,” Parmar said. Adding to that position, USD-INR is expected to consolidate in the range of 77.70 to 78.30 before moving northwards.
On the domestic equity market front, the BSE Sensex ended 1,045.60 points or 1.99 per cent lower at 51,495.79, while the broader NSE Nifty ended 331.55 points or 2.11 per cent lower at 15,360.60. Foreign institutional investors remained net sellers in the capital market on Thursday as they sold shares worth Rs 3,257.65 crore, according to stock exchange data. Senior Research Analyst Sriram Iyer said, “Indian rupee remained stable after trading in a smaller range against the dollar. Dollar buying by importers limited potential gains for the local currency, but Asian currencies edged higher and the local unit traded higher. for limited depreciation bias.” In Reliance Securities.
The US dollar index bounced back from lower levels in European trade, maintaining a positive tone as traders digested the Federal Reserve’s policy decisions. According to Jatin Trivedi, VP Research Analyst, LKP Securities, the rupee was trading near 78.10 as WTI crude prices have declined strongly from $125 and are now below $118 in Brent, providing relief to rupee buyers. “The US Fed hiked rates by 0.75 per cent. The Fed’s statement sounded odd as it indicated further rate hikes till inflation is under control,” Trivedi said. The time has not crossed 77.50.”
Read also | Rupee breaks down 13 paise to close all-time low at 78.17 against US dollar