Mumbai, Dec 4 (PTI) The rupee snapped its two-day losing streak to close 13 paise higher at 73.80 against the US dollar on Friday as the Reserve Bank of India maintained status quo on the benchmark interest rate for the third time in a row.
At the interbank forex market, the domestic unit opened at 73.81 and saw an intra-day high of 73.70 and a low of 73.81.
It finally closed at 73.80 a dollar, registering a rise of 13 paise. On Thursday, the rupee had settled at 73.93 against the American currency.
The Reserve Bank of India (RBI) on Friday left interest rates unchanged for the third straight time amid persistently high inflation and said the economy was recuperating fast and would return to positive growth in the current quarter itself.
The MPC “decided to continue with the accommodative stance of monetary policy as long as necessary — at least through the current financial year and into the next year,” Governor Shaktikanta Das said.
Traders said sustained foreign fund inflows, positive opening in domestic equities and weakness of the American currency in the overseas market also supported the local unit.
“A combination of a weak dollar index, optimism on the vaccine front, renewed round of fiscal stimulus talks in the United States and robust inflows give the rupee a slightly appreciating bias in the near term,” said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
However, 73.20 and eventually 73 will be strong hurdles for the rupee to breach given RBI’s intervention is likely to continue in the coming sessions, Sachdeva said adding that “we are expecting the RBI to mop up dollars in the spot market and simultaneously intervene in forwards to sterilize the liquidity impact”.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 3,637.42 crore on a net basis on Thursday, according to exchange data.
“Rupee had a range bound session as RBI neutralized the impact of systemic liquidity on account of dollar buying in spot market,” Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities. The rupee range remains in 73.55-74.25, he added.
Meanwhile, the dollar index, which gauges the greenback”s strength against a basket of six currencies, was down 0.16 per cent to 90.56.
On the domestic equity market front, the BSE Sensex ended 446.90 points or 1 per cent higher at 45,079.55, while the broader NSE Nifty jumped 124.65 points or 0.95 per cent to 13,258.55.
Brent crude futures, the global oil benchmark, rose 1.77 per cent to USD 49.57 per barrel.
“The Indian rupee appreciated against the US dollar supported by the weakness of the US currency. Additionally, a combination of optimism surrounding the COVID-19 vaccine and talks of a stimulus aid package also supported the domestic unit,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
According to Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities, the dollar index, which tracks the value of the dollar against a basket of six world currencies, continues to loose its value and has now fallen to 90.65 mark.
“Weakness in dollar is leading to flight of capital away from the US and into emerging markets,” Vakil noted.
On the RBI”s policy meet outcome, Vakil said on the forex front, the central bank said that it is “mindful of the consequences of its FX intervention action on domestic liquidity and inflation” also added “the RBI has taken measures for dampening volatility”. The statement is taken positively by the forex traders, he noted.
On a weekly basis, the rupee gained 25 paise.
“Indian Rupee advanced on weakness in Dollar and positive domestic markets. Further, rupee gained strength as Reserve Bank of India kept its policy rate unchanged and upgraded its growth projections for FY21 to (-) 7.5 per cent from (-) 9.5 per cent projected in October,” said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
Furthermore, consistent FII inflows supported the rupee.
However, sharp gains were prevented on concern that rising coronavirus cases across the globe will threaten economic recovery and on news that Pfizer has slashed its target for rollout of vaccine to half by the end of this year due to supply chain obstacles, Mukadam added. PTI DRR MR
Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI
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