Rupee vs Dollar: Prospects of BJP win in Karnataka boosts currency; check today's rate here
Indian rupee was trading at 67.315 up by 0.090 or 0.13% against US dollar.
The Indian rupee eased on Monday against US benchmark dollar index at interbank forex market. In early opening, the domestic unit strengthened by 12 paise to 67.21 against the dollar on fresh selling of the US currency by exporters and banks amid higher opening in the domestic equity market. It needs to be noted that, Rupee has been trading over 67-mark, which is an over 15 month high. The last time such a trend was recorded, was in February 2017.
At around 1221 hours, Indian rupee was trading at 67.315 up by 0.090 or 0.13% against US dollar.
Forex dealers in a PTI report attributed the rise in the rupee to weakness of the dollar against other currencies overseas. Also industrial output growing by 4.4 per cent in March, the slowest in five months, capped the rupee gains, they added.
Anindya Banerjee analyst at Kotak Securities said, "We import a majority of our petroleum needs and therefore, higher oil prices affect in myriad of ways: lower real disposable income for households affecting consumption, adversely impacting fiscal math of government and impacting the headline inflation numbers. RBI has already cautioned against higher inflation and they have said they stand ready to act if they believe CPI can continue to remain stubbornly higher than the 4% level."
Banerjee added, "A tighter monetary policy guidance and weak Rupee has made the life difficult for FPI investors in Indian bonds. Carry traders have been fleeing the Rupee pairs this year."
In the previous day, the rupee had settled almost flat at 67.33 against the US currency in highly volatile trade amid weak dollar cues. Also, foreign portfolio investor have removed money cumulatively in equity, debt and hybrid market up to Rs 1,544.57 crore, as per NSDL data.
FPI have been on sell side since start of 2018.
Meanwhile on Monday, the benchmark BSE Sensex was trading at 35,503.09 lower by 32.70 points or 0.09%, however in early opening, the index rose 37.19 points, or 0.10% at 35,572.98. On the other hand, Nifty 50 slumped by 16.20 points or 0.15% trading at 10,790.30.
According to Banerjee, the just concluded Karnataka elections is going to be a major event. Exit polls are all over the place. In case BJP forms government it will be a positive development for the Rupee, which is already one of the worst performing currencies in the EM basket in 2018. It will reduce some of the political risk premium.
"In that case, USDINR can trade all way down towards 66.60 levels on spot. However, if Congress retains the state, then it can add more fear premium to INR and can cause it to depreciate towards 68.30 levels on spot," added Banerjee.