Rupee rebounds from all-time low; rises 19 paise to 77.31/USD
After closing at an all-time low against the US dollar on Thursday, the rupee recovered some lost ground to trade at 77.31 against the US dollar in morning trade on Friday as the American currency retreated from its elevated levels.
At the interbank foreign exchange, the rupee opened at 77.35 against the American dollar, then gained further ground to quote at 77.31, registering a rise of 19 paise from the last close.
On Thursday, the rupee plunged 25 paise to close at its lifetime low of 77.50 against the US currency.
Forex traders said the Indian Rupee could see range-bound trade against the US dollar as broad dollar strength could offset losses from a rate hike by the Indian central bank next month due to rising domestic inflation.
India’s headline inflation galloped for a seventh straight month to touch an 8-year high of 7.79 per cent in April on rising food and fuel prices, raising the odds of an interest rate hike by the RBI early next month to tame prices.
With factory output measured in terms of the Index of Industrial Production (IIP) remaining subdued at 1.9 per cent in March, some economists feel that another interest rate hike on the heels of a 40 basis points increase last week may slow economic growth.
“A likely more hawkish policy shift from the RBI and expectations of RBI intervention will possibly support the rupee this Friday,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
However, weak Asian and emerging market peers this Friday morning, with the offshore Yuan touching a low of 6.8372 against the dollar will cap appreciation bias. Additionally, crude oil prices continued to strengthen and will cap appreciation bias.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.19 per cent lower at 104.65.
On the domestic equity market front, the 30-share Sensex was trading 638.13 points or 1.21 per cent higher at 53,568.44, while the broader NSE Nifty advanced 167.70 points or 1.06 per cent to 15,975.70.
Global oil benchmark Brent crude futures rose 1.68 per cent to USD 109.25 per barrel.
Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth Rs 5,255.75 crore, as per stock exchange data