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Rupee pulls back from 2-wk low as dollar retreats, rebounds 20 paise

Forex market largely withstood the initial discomfort and a broad based dollar weakness predominantly helped the rupee to reverse its bearish undertone.


PTI 07 Aug 2018, 01:23 PM India

The rupee made a spirited recovery from a two-week low to end higher by 20 paise at 68.68 against the US currency on fresh bouts of dollar selling by exporters and banks.

Forex market largely withstood the initial discomfort and a broad-based dollar weakness predominantly helped the rupee to reverse its bearish undertone.

Increased greenback sales by banks on behalf of exporters and rebound in the Chinese yuan also weighed on the trading front.

Subdued local equity markets and higher crude prices, however, restricted further gains.

Fears of a trade war remain the dominant market theme but currency traders are holding their nerve, a forex dealer commented.

But, investor confidence can be seen clearly on the domestic bourses that have been climbing to record highs since the start of July.

The broader NSE Nifty extended its record run for a third straight session, while the flagship BSE Sensex retreated from record levels in a highly volatile trade on profit-taking at higher levels.

Most Asian currencies weakened against the dollar on Tuesday as revived US sanctions on Iran and escalating trade tensions between Beijing and Washington tempered appetite for emerging market foreign exchange.

On the energy front, oil prices rose sharply on hopes that re-introduced US sanctions against major crude exporter Iran could tighten global supply.

The Benchmark Brent for September settlement is trading higher at USD 74.75 a barrel in the early Asian session.

Extending overnight weakness, the rupee opened lower at 68.91 against 68.88 previously at the Interbank Foreign Exchange (forex) market on sustained dollar demand from importers.

It slipped further to hit a low of 68.93 in early deals before witnessing a strong trend reversal.

The home currency touched a session high of 68.66 before ending at 68.68, revealing a handsome gain of 20 paise, or 0.29 percent.

Yesterday, the rupee had ended lower by 28 paise.

The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 68.8000 and for the euro at 79.5599.

The bond markets, however, succumbed to fresh unwinding and the 10-year benchmark bond yield rose to end at 7.79 percent.

Globally, the US dollar slipped lower against its major trading rivals, giving back some of the previous session gains.

Against a basket of other currencies, the dollar index is trading lower at 94.83.

In the cross-currency trade, the rupee remained firm against the pound sterling to end at 89.00 per pound from 89.03 yesterday.

The home currency fell back against the euro to finish at 79.60 as compared to 79.43 and dropped further against the Japanese yen to settle at 61.80 per 100 yens from 61.78 earlier.

Elsewhere, the pound sterling is trading little changed on the upside against the US dollar after rebounding from fresh 2018 lows as Brexit related uncertainty and the lack of economic stimulus both weighed on sentiment.

The euro is trading higher after recovering from multi-week lows on the back of weak dollar sentiment even as the German factory new orders and manufacturing PMI fell dramatically in June.

In forwarding market today, the premium for dollar dropped owing to sustained receiving from exporters.

The benchmark six-month forward premium payable in December declined to 117.25-119.25 paise from 119-121 paise and the far-forward June 2019 contract eased to 265-267 paise from 266-268 paise previously.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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