The Rupee on Thursday recovered from record low levels to settle 6 paise higher at 76.28 against the US dollar tracking gains in equity markets and foreign fund inflows.
The local unit had settled at an all-time low of 76.34 against the greenback on Wednesday. Forex traders said the rupee traded in a narrow range as gains in domestic equities supported the local unit amid lingering concerns over coronavirus outbreak in the country.
At the interbank foreign exchange market, the local currency opened higher at 76.11, but witnessed heavy volatility and slid to its all-time intra-day low of 76.55 against the American currency. The domestic unit later recovered ground to settle at 76.28 against the greenback, up 6 paise over its previous close.
Traders said concerns over the impact of coronavirus outbreak on the domestic as well as the global economy continued to haunt investors.
“Uncertainty and fragile market sentiments over COVID-19 will continue to keep the rupee under pressure. Further pressure will come from the uptick in crude and surge in the dollar index,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Gupta added, “Also, OTC timings have been trimmed to 10AM-2PM, and it is an illiquid, pessimistic market at this point in time and won’t be surprised if 77.50 is breached next week.”
Rupee opened stronger, but pared its gains soon and made a fresh all-time low, Devarsh Vakil Head Advisory HDFC Securities Research said, adding that “dollar selling from exporters near 76.5 and foreign fund buying in domestic equities for the last two days supported rupee recovery through day and rupee managed to close near April 8 levels”.
Foreign institutional investors (FIIs) remained net buyers in the capital market, as they bought equity shares worth Rs 1,943.41 crore on Wednesday, according to provisional exchange data.
Meanwhile, equity benchmark Sensex rallied over 1,265 points on Thursday, led by robust buying amid hopes of a second stimulus package from the Government. The BSE barometer ended 1,265.66 points or 4.23 per cent higher at 31,159.62. The NSE Nifty soared 363.15 points, or 4.15 per cent, to 9,111.90.
On a weekly basis, the currency has depreciated by 15 paise. “The Indian rupee has been under pressure throughout the week, hitting record lows due to the uncertainty in trade created by Covid-19. INR hit a fresh record low of 76.54/US dollar earlier today,” said Nish Bhatt, the founder & CEO of Millwood Kane International.
“The unpredictability on the Covid-19 influence means that the INR may come under more pressure in the coming weeks. Most Asian currencies have been falling due to uncertainty over the economic outlook, with near-zero exports due to the outbreak of coronavirus,” Bhatt said.