Plunging Indian rupee gets helping hand, recovers to 68.04 vs US dollar
The rupee on Tuesday staged a mild recovery after two sessions of decline and edged higher by eight paise to end at 68.04 against the US dollar on fresh selling of dollars by banks and exporters
The rupee on Tuesday staged a mild recovery after two sessions of decline and edged higher by eight paise to end at 68.04 against the US dollar on fresh selling of dollars by banks and exporters. Weakness in the greenback against other currencies overseas along with a positive closing of local bourses too supported the rupee recovery momentum.
The domestic currency yesterday hit a fresh 16-month low of 68.12 amid weak global cues. Overall, forex market sentiment improved amid easing of tensions between the US and China over trade tariff issue. “The rupee rebounded from its previous 16-month low and traded higher against the dollar in the morning session on the back of speculation of selling of the dollar by banks and also as signs of easing tensions between the US and China prompted dollar to give away some of its recent gains. However, the rupee’s gains were limited as Brent remained stubbornly close to 80,” Anand James, chief market strategist, Geojit Financial Services, said.
Meanwhile, investors turned a bit cautious ahead of the US Federal Reserve’s May policy meeting minutes release tomorrow even as US bond-yields have stabilised. In the meantime, global crude prices rose towards the key $80 a barrel underpinned by concern that falling Venezuelan crude output and a potential drop in Iranian exports could further tighten global supply. The Brent crude futures, an international benchmark, was trading higher at $79.79 a barrel in early Asian trade.
The yield on the benchmark 10-year government bond maturing in 2028 held steady at 7.81%. Uncertainty over the Reserve Bank of India (RBI) open market operation (OMO) purchase to infuse liquidity into the banking system this week, have kept bond investors mostly on the sideline on Tuesday, leading to a flat ending of the 10-year bond.
“Looking at the current liquidity scenario, investors were expecting RBI to announce more OMO purchases,” a dealer with a major state-run said.