Rupee Gains 25 Paise Against Dollar On Positive Cues
The Indian rupee gained 25 paise to close at 69.89 a dollar, in line with a rally in domestic equities, reflecting positive investor sentiments amid hopes that the incumbent National Democratic Alliance government will get a second term.
Sustained foreign fund inflows also helped the domestic currency to trade higher.
At the Interbank Foreign Exchange, the Indian unit opened at 69.99 a dollar and hit a high of 69.82 and low of 70.03 against the greenback. It finally settled the day at 69.89 a dollar, a gain of 25 paise.
The Financial Benchmark India Pvt. Ltd. set the reference rate for the rupee against the dollar at 69.93 and against the euro at 78.57. The reference rate for the rupee against the British pound was fixed at 90.79 and against 100 Japanese yen at 62.93.
In the previous session on Friday, the rupee was down 14 paise at 70.14. On a weekly basis, however, the domestic currency appreciated 78 paise.
Meanwhile, the U.S. dollar index—a measure of the value of the American currency relative to a basket of key foreign currencies—was marginally higher at 97.32.
Brent crude futures, the global oil benchmark, rose 0.68 percent to $66.19 a barrel. Forex traders attributed the rise in rupee to growing support for the Narendra Modi government in the upcoming general election. Prevailing geopolitical concerns in the wake of recent India-Pakistan military conflicts will be a key factor in the upcoming polls, they said.
Lok Sabha elections will begin on April 11 and will be held over seven phases followed by counting of votes on May 23, the Election Commission announced on Sunday.
Meanwhile, the BSE benchmark Sensex surged 383 points to close at 37,054.10 on Monday. Foreign institutional investors bought equities worth a net Rs 3,810.60 crore, while domestic institutional investors sold shares worth Rs 1,955.55 crore, according to provisional data available on the NSE website.
Analysts said foreign funds poured money in domestic equity market by pricing in a second term for Modi-led NDA government.
Bond markets are cautious ahead of the inflation data, which is likely to be higher from the January reading of 2.05 percent. An expectation of higher bond issuance for the next year also put pressure on government bonds.