Rupee Edges Higher To Close At 70.79 Against Dollar

Rupee Edges Higher To Close At 70.79 Against Dollar

The rupee recovered marginally by 8 paise to close at 70.79 against the US dollar on Tuesday on grows selling of the greenback by exporters and softening crude oil prices, reported Press Trust of India (PTI). The rupee’s rise was helped by dollar-selling by exporters and banks after the Chinese foreign ministry announced a mutually beneficiary agreement with the US, traders were quoted as saying in the PTI report. On Monday, the local currency fell by 18 paise to close at 70.87 against the US dollar.

At the interbank forex market, the rupee opened less at 70.91 and lost further ground to hit a low of 71.02 on a stronger dollar, strengthening US yields and worries about the escalation in US-China trade war. The local unit, however, pared the initial losses and finally settled the day on a higher note at 70.79 to the US dollar, up 8 paise.

As per V K Sharma, Head PCG and Capital Markets Group, HDFC Securities, “The rupee recovered steeply from the day’s low in the second half after Chinese Foreign Ministry spoke of mutual beneficiary agreement between US President Donald Trump and his Chinese counterpart.”

The 10-year government bond yield remained almost flat at 7.732 percent from its last close of 7.727 percent. The dollar remained strong at almost two-week high of 97.19 against the basket of global currencies.

Internationally, Brent crude, the international benchmark, was trading 0.23 percent higher at  $60.62 per barrel.

The domestic stock markets closed in the green after a volatile session on Tuesday. The S&P BSE Sensex closed 159.06 points or 0.45 percent higher at 35,513.14, while the broader Nifty50 barometer of the National Stock Exchange (NSE) settled at 10,685.60, up 57 points or 0.54 percent.

Foreign institutional investors (FIIs) made fresh purchases worth Rs. 811.52 crore on Tuesday, according to the provisional data.

On Monday, Reserve Bank of India (RBI) partially eased a need for companies to hedge dollars while raising funds from overseas markets. RBI said companies would now be needed to hedge 70 percent of their external commercial borrowings (ECB) for maturity periods of three to five years, instead of the full exposure.

Earlier last month, the government permitted state oil marketing firms to raise $10 billion in overseas loans without hedging the dollars.

The rupee has declined around 10 percent against the dollar since the beginning of the year.

The rupee lost 2.1 percent in September, compared with a drop of 3.6 percent in August, the worst since August 2015. In October, the rupee weakened by about 2 percent, news agency Reuters reported citing Refinitiv data. (With inputs from agencies)

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