Rupee Jumps 42 Paise To Close At 68.75 Against U.S. Dollar
The Indian rupee on Tuesday recovered from the day’s low to settle at 68.75 against the U.S. dollar, gaining 42 paise amid sustained foreign fund inflows and a rally in domestic equities.
Forex dealers said foreign fund inflows in the debt and equity markets helped the rupee recover. Besides, the local currency gained strength after the Reserve Bank of India announced second dollar-rupee swap, they said.
At the Interbank Foreign Exchange, the domestic currency opened lower at 69.36 a dollar but recovered the losses during the day and touched the day’s high of 68.71. It finally settled at 68.75 per dollar.
The Indian unit appreciated by 18 paise on Friday to close at 69.16. The forex market was closed on Monday.
According to VK Sharma, head PCG & capital markets strategy at HDFC Securities, rupee and bonds rose after the RBI announced the second forex swap. “Sovereign bonds gain as the RBI's currency swap will add to liquidity in the banking system,” Sharma said, adding “the swap auction comes ahead of the important RBI policy statement that is scheduled this week. The central bank is expected to cut rates and a dovish statement could put pressure on the rupee”.
The RBI on Monday said it will inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years on April 23, the second such auction within a month.
Forex dealers said foreign fund inflows and heavy buying in domestic equities supported the rupee, however, strengthening of the U.S. dollar and rising crude prices restricted the upmove.
Foreign institutional investors remained net buyers in the capital markets, putting in Rs 543.36 crore on Tuesday, as per the provisional data.
Brent crude futures, the global oil benchmark, rose 0.10 percent to trade at $69.08 per barrel.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, surged 0.17 percent to 97.39.