Rupee spurts by 14 paise to 75.62 foreign fund inflows, weak dollar

MUMBAI, May 29: The rupee appreciated by 14 paise to close at 75.62 against the US dollar on Friday as foreign fund inflows and weak American currency boosted investor confidence.
Forex traders said investors are awaiting the country’s gross domestic product data for the January-March quarter, due later in the day, for further cues.
The rupee opened higher at 75.71 at the interbank forex market and later touched a high of 75.48 in day trade. The local unit finally settled at 75.62 to the US dollar, showing a gain of 14 paise over the last close of 75.76.
Indian stocks rose for a third straight session on Friday on the back of buying by foreign funds. The 30-share BSE index rebounded from the lows to settle 223.51 points or 0.69 per cent higher at 32,424.10. NSE Nifty advanced 90.20 points or 0.95 per cent to 9,580.30.
Foreign institutional investors were net buyers in the capital market, as they bought equity shares worth Rs 2,354.14 crore on Thursday, according to provisional exchange data.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.08 per cent to 98.30.
On a weekly basis, the domestic unit has appreciated by 33 paise. It had settled at 75.95 on May 22.
“Rupee marked the first weekly gains in the last four weeks amid foreign fund inflows and a weaker American dollar. This month so far, foreign institutions bought equities worth USD 1.266 billion. Safe-haven currencies like dollar and yen fell after improvement in ‘risk-on’ sentiments,” said Devarsh Vakil, Head Advisory, HDFC Securities.
Notwithstanding the appreciation in the rupee, the overarching trend for the rupee looks weak, said Sugandha Sachdeva, VP-Metals, Energy & Currency Research, Religare Broking.
“Although the rupee may find some ground temporarily due to dollar inflows and a rebound in domestic equities, where the 76.60 mark is providing a cushion, it will be difficult for the rupee to climb above the 74.80 mark,” Sachdeva said.
Sachdeva further said rising US-China tensions can weigh on the domestic currency.
“There could be several sanctions put forth by the US on China, which will sour risk appetite further, given the long-standing history of a trade war between the two sides, We expect the rupee to trade in the 74.80 to 76.60 band for the next few weeks,” Sachdeva said.
The US will announce “certain decisions” on China on Friday, President Donald Trump has said as he emphasised that Beijing should have stopped the coronavirus at the source.
“Tomorrow, we’re going to be having a press conference on China. So, we’ll be making certain decisions and we’ll be discussing them tomorrow,” Trump told reporters at the White House on Thursday.
“There is some optimism in the forex market over coronavirus vaccine while the hostility between the US and China is escalating, keeping the positive sentiments in check.
“The residual flows from foreign fund and strength in local equities will support the appreciation in rupee, however, the trade tiff will be a major threat,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Brent crude futures fell 2.66 per cent to USD 34.35 per barrel.
Meanwhile, in India, the death toll due to COVID-19 rose to 4,706 and the number of cases climbed to over 1.65 lakh, according to the Health Ministry.
The number of cases around the world linked to the disease has crossed over 58.29 lakh and the death toll has topped 3.60 lakh.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.7501 and for rupee/euro at 83.4812. The reference rate for rupee/British pound was fixed at 92.9418 and for rupee/100 Japanese yen at 70.25. (PTI)