Rupee Off Record Low, Logs Best Single-Day Gain In 18 Months: 10 Points

Rupee Vs US dollar: The sharp rise in the rupee came on a day the government proposed a hike in effective import duty on some steel products.

Rupee Off Record Low, Logs Best Single-Day Gain In 18 Months: 10 Points

INR Vs USD: The rupee is down more than 13% against the US dollar so far this year

The rupee rose sharply against the US dollar to close at 72.37 on Wednesday, breaking its two-day fall. That marked the biggest single-day recovery in the rupee since March 14, 2017. The upmove in the rupee came on a day the government proposed a hike in effective import duty on some steel products, as part of its plan to cut "non-necessary" imports to defend the rupee. Heavy selling of dollars by banks and exports along with weakness in the greenback in global markets supported the rupee, news agency Press Trust of India reported. Despite the sharp rise on Wednesday, the rupee is still down more than 13 per cent so far this year, cementing its position as the worst-performing currency in Asia.
Here are 10 things to know about the rupee's value against the dollar:
  1. The rupee touched an intraday high of 72.34 against the American currency during the session, before settling at 72.37 for the day.
  2. Crude oil prices eased on Wednesday, but held near their highest levels this year. Brent crude - a global benchmark of crude oil - was near $79 a barrel, as anticipation of tightening supply supported the price. High crude oil prices make imports costlier for India, which relies on imports to meet more than 80 per cent of its oil requirement, therefore widening the current account deficit.
  3. "Current account deficit in emerging market countries could underperform if commodity prices rise," IFA Global, a forex advisory firm, said in a note.
  4. Weakness in the dollar overseas supported the rupee. The dollar index - which determines the American currency against six major currencies - inched higher but stayed close to seven-week lows.
  5. The steel ministry proposed increasing the effective import duty on some steel products to 15 per cent from current rates ranging from 5 per cent to 12.5 per cent, reported news agency Reuters, citing two sources and a government document reviewed by it.
  6. The move on steel duty was part of a broader government plan to cut "non-necessary" imports, among measures announced by the government last week to contain the currency as well as the current account deficit.
  7. Analysts expect the rupee to stay under pressure going forward.
  8. "Expectations of some relief being provided by RBI in the form of an accommodation window to oil companies, coupled with the outcome of some of the measures announced earlier, should keep the rupee between 72.20-73 range," said Salil Datar, CEO and executive director, Essel Finance VKC Forex. According to another Reuters' report, the government is considering asking the central bank to offer dollars directly to oil marketing companies or through a state-run bank, as part of steps to stem a fall in the rupee.
  9. IFA Global expects the rupee to trade in the range of 72.65-73.10 with an upside bias.
  10. Meanwhile, China on Tuesday added $60 billion of US products to its import tariff list in retaliation to US President Donald Trump's planned levies on $200 billion of Chinese goods, fueling hopes that the world’s two largest economies are likely to avoid a trade war. (With agency inputs)

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Rupee hit intraday high of 72.34, settled at 72.37 against dollar
Heavy selling of dollars, weakness in greenback overseas lifted rupee
Rupee still down more than 13% against dollar so far this year

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