Rising for the second straight session, the rupee jumped 33 paise to end at 85.77 (provisional) against the US dollar on Tuesday due to a sharp rise in equity markets and continuing weakness in the American currency amid global uncertainties. Besides, lower global crude prices, favourable domestic inflation numbers and the US administration’s latest move to suspend the additional 26 per cent tariffs on India till July 9 also supported the local currency, forex traders said.
At the interbank foreign exchange, the domestic unit opened at 85.85, the day’s lowest level, and touched the intra-day peak of 85.59 against the greenback. The unit ended the session at 85.77 (provisional against the dollar, registering a gain of 33 paise over the previous closing level.
The rupee had closed Friday’s session with a sharp gain of 58 paise at 86.10 against the greenback. Forex markets were closed on Monday on account of Dr Baba Saheb Ambedkar Jayanti. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee gained on weak US dollar index and a surge in domestic markets.
Choudhary further said that the overnight decline in crude oil prices and upbeat macroeconomic data supported the rupee. However, FII outflows capped sharp gains.
“Overall weakness in crude oil prices may also support the rupee at lower levels. However, importer buying of dollars and FII outflows may cap sharp gains. Traders may take cues from Empire State manufacturing index data from the US,” he said and projected the USD-INR spot price to be in the range of `85.40 to `86.
The latest government data released on Tuesday showed wholesale price inflation in the country declined to a 6-month low of 2.05 per cent in March as prices of vegetables, potato and other food items eased. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.02 per cent at 99.38, a level seen on March 1, 2022. Brent crude, the global oil benchmark, fell 0.11 per cent to its four-year low of $64.81 per barrel in futures trade. The crude had earlier hit this level in April 2021. In the domestic equity market, the 30-share BSE Sensex jumped 1,577.63 points or 2.10 per cent to settle at 76,734.89, while the Nifty surged 500.00 points or 2.19 per cent to 23,328.55.
Foreign institutional investors (FIIs) offloaded equities worth Rs 2,519.03 crore on a net basis on Friday, according to exchange data.
