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Rupee Recovers 2% Against Dollar In 2 Days: 10 Things To Know

The rupee strengthened by 101 paise against the greenback to settle at 72.44 for the day, marking its strongest single-day gain since September 2013.

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Rupee Recovers 2% Against Dollar In 2 Days: 10 Things To Know

The rupee is down over 13% against the dollar so far this year

The rupee registered its strongest single-day gain in five years on Friday, amid a plunge in crude oil prices and a spike in equity markets. The rupee strengthened by 101 paise against the greenback to settle at 72.44 for the day, marking its strongest single-day gain since September 2013. Selling of dollars by exports along with weakness in the American currency against a group of major peers supported the rupee in the forex market. Sharp advances in the domestic markets - with the benchmark indices climbing to their highest levels in more than two weeks - also boosted the rupee. Despite rising 2 per cent in two consecutive sessions, the rupee is down more than 13 per cent against the dollar so far this year.
Here are 10 things to know:
  1. The single-session gain of 1.4 per cent for the rupee came on a day China and the United States expressed optimism about resolving their bruising trade war.
  2. The rupee rose to as much as 102 paise against the greenback at the highest level recorded during the session, before settling at 72.44 for the day.
  3. With crude oil prices constantly dipping, concerns over widening current account deficit have slightly eased, helping the rupee claw back some lost ground.
  4. Crude prices have fallen more than 15 per cent from the near four-year highs touched in early October on worries the looming Iran sanctions could drain supply from global markets. On Friday, Brent futures - the global benchmark for crude oil - fell about 1 per cent to trade below the $73 a barrel mark.
  5. "There were massive long dollar positions, which got hit once the rupee broke the 73 level. Large corporates sold dollars and squared up long positions. The next key trigger will be the mid-term US polls," news agency Reuters cited Anindya Banerjee, deputy vice president-currency derivatives at Kotak Securities, as saying.
  6. There was large-scale unwinding of speculative long dollar positions on the rupee, which led to the sharp rally in the currency relative to its peers in the region, the agency cited traders as saying.
  7. Domestic equity markets registered sharp gains, with benchmark indices Sensex and Nifty logging their highest closing levels in more than two weeks. The 30-scrip BSE index rose 579 points, or 1.7 per cent, to reclaim the 35,011 mark.
  8. The US government said later on Friday that it would allow eight countries to continue importing Iranian oil but only at much lower levels after the reimposition of sanctions on Monday.
  9. Without naming the eight countries, US Secretary of State Mike Pompeo said the exemptions on importing Iranian oil were being granted to countries that have pledged to or have already cut back on purchases of petroleum from Iran, which has long depended on crude exports to power its economy.
  10. The rupee is expected to touch 72 to the dollar next week as sentiment remains upbeat, Reuters cited dealers as saying.

(With agency inputs)





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