Rupee At 71.31/$ On Strong Foreign Fund Inflows

The rupee appreciated by 14 paise on Friday to close at 71.31 versus the dollar on persistent foreign fund inflows even as the greenback strengthened overseas amid fresh concerns over global growth.

This is the fourth successive session of gains for the domestic currency, during which it has climbed 49 paise.

At the Interbank Foreign Exchange, the rupee opened stronger at 71.37 a dollar. The local unit moved in the range of 71.44-71.03, before finally ending at 71.31, showing a gain of 14 paise. The rupee on Thursday appreciated 11 paise to close at 71.45 per dollar.

On a weekly-basis, however, the domestic currency registered a loss of 6 paise.

“The reduction in interest rates and relaxation of foreign investment limits bodes well for the rupee in expectation of overseas inflows. So far this month, overseas investors bought $297.10 million in equity, while they sold worth $304.70 million in debt market,” said VK Sharma, head-PCG and capital markets strategy at HDFC Securities.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.7 percent to 95.57.

Fears of a global economic slowdown resurfaced after the U.S. President Donald Trump said he did not expect to meet his Chinese counterpart Xi Jinping before the Mar. 1 deadline in trade war negotiations between the two superpowers.

A top White House adviser on Thursday said the Washington and Beijing were still a “sizeable distance” apart in the trade talks, and no date has been set for a meeting between the countries’ leaders.

Forex traders said firming crude oil prices and heavy selling in domestic equities weighed on the local unit.

Brent crude, the global oil benchmark, was trading at $61.78 per barrel, higher by 0.24 percent. Indian equity markets closed sharply lower on Friday, led by a selloff in auto and metal stocks.

The S&P BSE Sensex today ended 1.15 percent lower at 36,546.48 and the NSE Nifty 50 Index ended below 10,950, down 1.14 percent.

Foreign portfolio investors bought shares worth a net Rs 843.73 crore, and domestic institutional investors sold shares to the tune of Rs 960.04 crore on Friday, provisional data showed.

The Financial Benchmark India Private Ltd. set the reference rate for the rupee/dollar at 71.29 and for rupee/euro at 80.83. The reference rate for rupee/British pound was fixed at 92.29 and for rupee/100 Japanese yen at 64.98.