1 hr ago
Indian Rupee Gains 13 Paise as Crude Oil Eases
The Indian rupee became slightly stronger against the US dollar on Tuesday morning.
It reached 95.65 rupees per dollar after opening at 95.75.
Lower oil prices helped because India needs to buy oil from overseas.
Investors also felt more positive about Indian shares.
However, the dollar remained strong after the US Federal Reserve raised interest rates.
Foreign investors continued selling Indian shares, which put pressure on the rupee.
An analyst said the rupee may stay within a limited range and that the Reserve Bank of India could intervene if it weakens too much.
Government data also showed that growth in important infrastructure sectors slowed in August.
The rupee strengthened 13 paise to 95.65 against the US dollar in early Tuesday trade.
The currency opened at 95.75 after closing at 95.78 on Monday.
Easing immediate oil-supply concerns and positive domestic equity sentiment supported the rupee.
A firm dollar after the US Federal Reserve’s rate hike and foreign portfolio outflows limited gains.
The rupee’s movement came as India’s core-sector growth slowed to 4.8% in August, although reports differed on whether eight or nine sectors were counted.
- Who
- The Indian rupee, the US dollar, domestic equity investors, foreign institutional investors, and the Reserve Bank of India were involved.
- What
- The rupee gained 13 paise to trade at 95.65 against the US dollar in early trade.
- Where
- At the interbank foreign exchange market in India.
- When
- Tuesday morning; the rupee’s previous close was on Monday at 95.78.
- Why
- The rupee was supported by easing crude-oil supply concerns and positive domestic market sentiment, while a firm dollar and foreign portfolio outflows limited its gains.
Factors Supporting the Rupee
Factors Pressuring the Rupee
Oil and market sentiment
Factors Supporting the Rupee
A pullback in crude oil from elevated levels, easing immediate supply concerns, and positive Indian equity sentiment supported the rupee.
Factors Pressuring the Rupee
Brent crude futures were still up 1.05% at $101.39 per barrel, and continuing oil-price risks could limit the currency’s improvement.
Currency outlook
Factors Supporting the Rupee
Anindya Banerjee said softer crude was the rupee’s main support and identified 95.50 and 95 as support levels.
Factors Pressuring the Rupee
Banerjee said a firm dollar after the US Federal Reserve’s rate hike and foreign portfolio outflows were offsetting the benefit from softer crude; he placed the upper barrier near 96.30 and expected Reserve Bank of India intervention around 96.30–96.50.
Key facts
- Early exchange rate
- 95.65 rupees per US dollar
- Opening rate
- 95.75 rupees per US dollar
- Previous close
- 95.78 rupees per US dollar on Monday
- Dollar index
- 100.35, down 0.07%
- Brent crude futures
- $101.39 per barrel, up 1.05%
- Foreign institutional investor selling
- ₹576.20 crore on a net basis on Monday
- August core-sector growth
- 4.8%, compared with 5% in July and 6.2% a year earlier
Quotes
Anindya Banerjee
Head of Commodity and Currency Research at Kotak Securities
“The central bank has also been actively draining the surplus liquidity created by the special deposit inflows through bond sales and reverse-repo auctions, which is keeping the adjustment orderly”
deccanchronicle.com
“The rupee remains range-bound. Softer crude is its main support, offset by a firm dollar after the Fed's hike and continued foreign portfolio outflows”
deccanchronicle.com
Sources
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