Rupee Gains Significantly To Over One-Month Highs; Well Below 79 Per Dollar

The rupee gained significantly on Tuesday and rallied to well below 79 per dollar.

Rupee gains significantly to below 79 per dollar

The rupee gained for the fourth straight session on Tuesday and gained significantly to well below 79 per dollar, driven largely by significant reversal in foreign capital inflows and a weaker dollar.

Bloomberg quoted the rupee at 78.6512 against the greenback, compared to its previous close of 79.0262 on Monday.

PTI reported that the rupee jumped 41 paise to close provisionally at 78.65 against the US dollar on Tuesday buoyed by persistent foreign fund inflows into capital markets and softening crude oil prices.

At the interbank forex market, the local unit opened strong at 78.96 against the greenback and witnessed an intra-day high of 78.49 and a low of 78.96. It finally ended at 78.65 against the American currency, a rise of 41 paise over its previous close, PTI said.

In the previous session, the rupee had closed at 79.06 against the US dollar.

"Against the odds, the Indian rupee and equities outperformed in the region as foreign institutions turned into net buyers of equities and debt. The dollar-long liquidation, FPI inflows, lower crude oil prices and improvement in high-frequency data very well supported the rupee gains," Dilip Parmar, Research Analyst, HDFC Securities, told PTI.

Going ahead, the bias remains downward as the pair is closing below 50 days' simple moving average and a level below 78.50 will give way for 77.60. "However, one should adjust their position as per the geopolitical updates from US-China", he added.

That reversal in the rupee from repeated all-time lows and a breach of 80 per dollar has been significant and swift.  

On Monday, foreign institutional investors were net buyers in the capital market, purchasing shares worth Rs 2,320.61 crore, per the latest exchange data. 

The rupee's fortunes has been driven by foreign investors turning into net buyers of Indian assets and the rampant dollar stumbling to its lowest since mid-June on easing bets of aggressive Federal Reserve monetary action amid recession fears.

The dollar continued its decline on Tuesday, falling to its lowest in two months against the recovering Japanese yen and losing ground on other peers as investors continued to position for a less aggressive pace of Fed rate hikes.

Looking ahead, traders will turn focus to the Reserve Bank of India's (RBI) monetary policy decision on interest rates on Friday.

With inflation at multi-year highs, the RBI's monetary policy committee is seen raising rates, though the views on the quantum of increase were split wide between 25 basis points and 50 basis points, a Reuters poll of economists showed.

.