Rupee vs. US dollar: Indian currency rises 73 paise, exceeds 73 mark against US dollar
The rupee rose 73 paise to break through the 73 mark against the US dollar on Tuesday, supported by measures to increase liquidity announced by the RBI.
A weak greenback abroad and a positive trend in the stock markets further supported the local currency, traders said.
In the interbank forex market, the domestic unit opened at 73.18 against the US dollar and fluctuated between 72.75 and 73.19.
It ultimately finished at 72.87, up 73 paise from its previous close of 73.60.
The dollar index, which measures the strength of the greenback against a basket of six currencies, was trading down 0.25% at 91.91.
The Reserve Bank on Monday announced a series of measures, including term repo transactions totaling Rs 1 lakh crore in mid-September to ease the pressure on liquidity and maintain favorable financial conditions with a view to ensuring a sustainable recovery economic growth.
He also said the recent appreciation of the rupee had helped contain imported inflationary pressures, which many saw as a signal that the central bank may slow down its dollar purchases.
On the domestic stock market front, BSE Sensex closed 272.51 points, or 0.71% higher, at 38,900.80. The NSE Nifty rose 82.75 points or 0.73% to 11,470.25.
Foreign institutional investors were net sellers in the capital market as they dumped stocks worth Rs 3,395.49 crore on Monday, exchange data showed.
Futures on Brent crude, the world’s benchmark for oil, rose 1.15% to $ 45.80 a barrel.
“The rupee has risen following the influx of funds into Indian stocks and the weakness of the dollar relative to its major crosses,” said Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services.
According to Sriram Iyer, senior research analyst at Reliance Securities, “the US dollar continued to extend its losses on Tuesday as investors continued to exit the greenback thanks to an accommodating Fed.”
In addition, the local unit also won amid speculation that the RBI might be freer from the appreciation of the rupee after saying that a strong rupee helps contain imported inflationary pressures, Iyer said.
Traders said the next biggest trigger point could be US nonfarm wage data on Friday.
“The Indian rupee continued its positive momentum on the first day of September. Even after a weaker than expected economic growth figure, the rebound in August PMI figures suggests an ongoing recovery,” said Devarsh Vakil , Deputy Director of Retail Research, HDFC Securities.
Vakil noted that the weakness of the general dollar index, inflows of dollars and the central bank’s emphasis on reducing imported inflation and moving away from dollar-buying interventions have supported the rupee. .
“Technically the USD-INR pair has minor support near the 72.50 level and strong support near the 72.00 levels while on the higher side resistance has moved from 75.50 to 74.50”, did he declare.
At the same time, the activity of the Indian manufacturing sector returned to growth territory in August after four months, driven by a rebound in production volumes and new work, in a context of improving customer demand following resumption of business operations, according to PMI data.