Rupee Edges Higher, Still Below 70 Mark Against Dollar

Rupee Edges Higher, Still Below 70 Mark Against Dollar

The rupee rose mildly against the US dollar to close at 70.10 on Tuesday. That marked a recovery of 6 paise against the greenback, compared to the all-time closing low of 70.16 registered in the previous session. Selling of the US currency by exporters and banks amid fresh inflow of foreign funds supported the rupee, say analysts. Weakness in the dollar, which declined to its lowest level recorded in nearly a month against a group of six major currencies, also provided some support to the rupee.

The rupee had advanced to 70.02 at the day’s highest point, but limited the upside by the end of the session.

The US and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA). The trade deal pushed the dollar lower against a basket of major currencies as investors sought riskier assets and the greenback’s safe-haven appeal declined.

“With the US reaching a bilateral agreement with Mexico, the dollar index has dropped from 96 to 94 levels. However, with Brent oil inching up to $75 / barrel, rupee will continue to be under pressure,” Salil Datar, CEO and executive director, Essel Finance VKC Forex, told NDTV.

International crude oil prices rose towards their highest since July 11, thanks to evidence of still-modest increases in output from OPEC and improving Chinese refining demand. Brent crude oil futures were around $76.65 a barrel in recent trade.

Meanwhile, domestic stock markets continued their record-setting spree. BSE benchmark index gained 202 points to close at a record 38,896 while the NSE Nifty settled above the 11,700 mark for the first time. Continued inflows by institutional investors pushed the stock markets higher.

Foreign portfolio investors (FPIs) net purchased equities worth Rs. 252.52 crore while net buys by domestic institutional investors (DIIs) stood at Rs. 1,117.24 crore on Monday, according to provisional data from the NSE.

Analysts will closely watch the GDP growth data for the April-June quarter due on Friday.

“We expect Rs. 70/dollar now to be the new normal. With the GDP data expected this week, we expect rupee to range between Rs. 69.75-70.40,” Mr Datar added.