Rupee rebounds 15 paise to 77.55 on weak dollar, expected RBI rate hike
The rupee recovered from record lows and settled 15 paise higher at 77.55 against the US currency on Monday following a weak dollar in overseas markets and the RBI governor hinting at another rate hike in June to arrest rising inflation.
At the interbank forex market, the domestic unit opened at 77.69 against the US dollar. It moved in a range of 77.51 to 77.69 during the session.
The rupee finally snapped its three-session losing streak and closed at 77.55, registering a rise of 15 paise over its previous close. On Friday, the rupee had settled at a record low of 77.70 against the American currency.
Sriram Iyer, Senior Research Analyst at Reliance Securities said that the rupee ended stronger against the dollar following comments from RBI Governor Shaktikanta Das who said the central bank will not allow a runaway depreciation of the rupee at a rapid pace.
The rupee will find its level and the central bank does not have a specific target on the exchange rate in mind and intervention in the domestic currency market is multi-pronged to minimize the actual outflows of dollars, Das told CNBC-TV18.
Das also hinted at another interest rate hike in early June to bring down the stubbornly high inflation rate, saying that ''expectation of rate hike, it's a no-brainer''.
Asian currencies were mostly stronger while the dollar index fell and aided sentiments.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 1 per cent lower at 102.12.
Indian government bond yields ended higher, as traders remain worried about the impact of the cut in excise duty on fuel on the country's fiscal position, Iyer said.
''Rupee traded positive as the dollar index traded weak below USD 103 giving strong support to the rupee. Along with the dollar index, the secondary market showed some positive momentum in the first half and eventually gave up gains in the second, yet giving some confidence to rupee buyers,'' said Jateen Trivedi, VP Research Analyst at LKP Securities.
According to Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, the rupee continued to consolidate and volatility remained confined to a narrow range despite choppiness in domestic equities.
''Today volatility for the dollar could remain low as no major economic data is expected to be released from the US. We expect the USD-INR (Spot) to trade sideways and quote in the range of 77.20 and 77.80,'' Somaiya added.
However, unabated foreign fund outflows and firm crude oil prices weighed on the rupee and kept the appreciation bias capped.
On the domestic equity market front, the 30-share BSE Sensex ended 37.78 points or 0.07 per cent lower at 54,288.61, while the broader NSE Nifty fell 51.45 points or 0.32 per cent to 16,214.70.
Brent crude futures, the global oil benchmark, advanced 1.27 per cent to USD 113.98 per barrel.
Foreign institutional investors remained net sellers in the capital market on Monday as they offloaded shares worth Rs 1,951.17 crore, as per stock exchange data.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)