The rupee on Tuesday made a strong comeback against the US dollar, a day after it touched a near five-year low of 68.80. Recovering by a steep 23 paise, the rupee ended at 68.57, on fresh dollar selling by exporters and corporates, reported news agency Press Trust of India (PTI). Overall, sentiment turned increasingly bullish on general dollar weakness related to twists and turns following renewed concerns on the US-China trade war. The dollar index, which measures the American currency against a basket of six major currencies, declined 0.4 per cent.
Here are five things to know about movement in the rupee against US dollar (INR vs USD):
1. Crude prices rose sharply after Libya declared force majeure on some of its crude exports, while the loss of Canadian supplies helped lifted US crude to levels not seen since late 2014. Brent crude futures, an international benchmark, were trading up at $78.25 a barrel in early Asian trade.
2. The rupee hit a low of 68.97 in intraday trade in sync with the weakening of other currencies in the region and also heavily weighed down by steady capital outflows. Reversing early steep losses, the currency bounced back in late afternoon trade to trade at a session high of 68.56 before ending at 68.57, showing a smart gain of 23 paise, or 0.33 per cent, against the greenback.
3. On the macro front, growth of eight infrastructure industries dropped to a ten-month low of 3.6 per cent in May due to a decline in production of crude oil and natural gas. This is the lowest growth rate since July 2017 when infrastructure industries had expanded by 2.9 per cent. The growth rate in April was 4.6 per cent.
4. The country's fiscal deficit in May touched 55.3 per cent of the budget estimate (BE) on account of lower expenditure as compared to 68.3 per cent in the corresponding period last year. The government had budgeted to cut fiscal deficit to 3.3 per cent of GDP in current fiscal year, from 3.53 per cent of GDP in 2017-18.
5. Meanwhile, the rebound on the local equities came on the back of value buying in beaten down stocks along with some short-covering. The global capital markets also showed some stability after recent beating.
(With agency inputs)
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