Mumbai, Oct 30 The rupee appreciated 50 paise to close at 94.76 against the US dollar on Friday, supported by a positive trend in domestic markets and a soft US dollar.
Forex traders said both the currency and the bond market found additional support from softer crude oil prices and the inflow of foreign funds.
At the interbank foreign exchange market, the rupee opened at 95.21, then gained ground and touched an intraday high of 94.75 and a low of 95.28 against the American currency and finally closed at 94.76, registering a steep gain of 50 paise over its last close.
On Thursday, the rupee consolidated in a narrow range and ended 2 paise higher at 95.26 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 101.66, lower by 0.37 per cent.
Brent crude, the global oil benchmark, was trading lower by 1.03 per cent at USD 114.13 per barrel in futures trade.
On the domestic equity market front, Sensex climbed 308.49 points to settle at 74,459.53, and Nifty rose 116.35 points to 23,053.10.
“We expect the rupee to trade with a slight negative bias on geopolitical tensions in the Middle East after the US warned its allies to prepare for a fresh strike on Iran after US elections,” said Anuj Choudhary, Research Analyst, Mirae Asset Sharekhan.
Choudhary further noted that a surge in crude oil prices may also pressurise the rupee. “However, positive domestic markets, a soft US dollar and US Treasury yields may support the rupee at lower levels. Any intervention by the RBI may also support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 94.80 to 95.35,” he said.
Foreign Institutional Investors (FIIs) turned net buyers and purchased equities worth Rs 3,598.54 crore on a net basis on Friday, according to exchange data.
Meanwhile, the IMF on Thursday said exchange rate flexibility should be the preferable policy response to help the Indian economy adjust to energy shocks, amid reports that the RBI resorted to massive market intervention to prop up the rupee.
“Our view is that the rupee should be the first line of defence in the face of these shocks. So, allowing the exchange rate to move freely to reflect the impact of these shocks is important to help the Indian economy adjust to the shocks,” IMF Communications Director Julie Kozack has said.
The RBI data released on Friday showed India’s forex reserves dropped by USD 1.269 billion to USD 719.748 billion during the week ended October 30. The overall reserves had dropped by USD 5.011 billion to USD 721.016 billion in the previous reporting week ended October 16.
(PTI News)
