Rupee rises for fourth day, but analysts cautious

Mumbai: Rising for a fourth straight session, the rupee surged by 31 paise to close at a nearly two-week high of 75.59 against the US dollar on Tuesday as positive domestic equities and a weak American currency in the overseas markets boosted investor sentiment.

Risk sentiment recovered in global markets, helping riskier assets and emerging currencies post gains against the dollar, analysts said.

At the interbank forex market, the domestic unit opened strong at 75.74 against the greenback and witnessed an intra-day high of 75.41 and a low of 75.74 during the day’s trade. It finally ended at 75.59 a dollar, the highest closing level since December 8.

In the previous session, the rupee had settled at 75.90 against the US dollar. Aided by low crude prices, the local unit has appreciated by almost 1 per cent or 73 paise in the four sessions to Tuesday.

“Indian rupee continued its upward momentum for a fourth day in a row as dollar index retracted while risk sentiment recovers. The RBI was absent over the past few weeks, but yesterday’s announcement of the auction of VRRR worth Rs 2 lakh crore on Wednesday indicated policy normalisation.

“Rupee has seen pullback from its 20 months lows but difficult to say that pain is over as foreigners are continuously selling and Fed is heading for rate hike as early as the first quarter of 2022,” Dilip Parmar- Research Analyst, HDFC Securities, said.

On the domestic equity market front, the BSE Sensex surged 497.00 points or 0.89 per cent to end at 56,319.01 while the broader NSE Nifty jumped 156.65 points or 0.94 per cent to 16,770.85.Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, declined 0.20 per cent to 96.35. Brent crude futures, the global oil benchmark, surged 0.87 per cent to $72.14 per barrel.

Foreign institutional investors remained net sellers in the capital market on Monday, as they offloaded shares worth Rs 3,565.36 crore, according to exchange data.

“Rupee traded positive above 75.70 amid weakness in dollar and positive trend in capital markets. Crude kept the gains limited as 75.50 acts as resistance. Going ahead rupee can be seen in range of 75.40- 76.00,” Jateen Trivedi, Senior Research Analyst at LKP Securities said.