Even as investors continue to wait for the US election results, the rupee strengthened by 44 paise to 73.92 against the US dollar in the opening trade on Friday (November 6) supported by foreign portfolio flows. Traders stated that positive domestic equities and expectations of Democratic candidate Joe Biden's victory in the US presidential election supported the local unit. At the interbank forex market, the domestic unit opened at 73.99 against dollar, then gained further ground and touched 73.92, registering a rise of 44 paise over its previous close.
On Thursday (November 5), the rupee gained 40 paise to end at 74.36 against the US dollar. ''The sentimental impact on rupee coming from mixed updates has remained relatively mild compared to other Asian currencies. Hence, when other currencies depreciated by more than 1.5-2 per cent on intraday basis, the rupee remained marginally weak showing the RBI's activeness in managing the volatility and preventing rupee from depreciating sharply'', said Amit Pabari, managing director at forex advisory firm CR Forex.
He added that the price action in the pair didn't reflect the state of panic amongst buyers which again assures that weakness in the rupee, if any shall be capped around 75.00 levels. Considering the overall updates, weakness in dollar and rally in equities, the momentum of the rupee suggests that the pair is paving way close to 73.20-73.50 levels with some sessions of spikes. As the broader pressure is on the appreciation side, every uptick between 74.00-74.50 levels shall remain a selling opportunity.
"The US dollar has been badgered as Joe Biden closed in on a victory and the US Federal Reserve reiterated its commitment to keeping the policy stance accommodative until its target of getting the inflation to overshoot 2 per cent moderately for some time is achieved," said Abhishek Goenka, Founder & CEO, IFA Global. He added that a Biden White House would bring more stability and reduce uncertainty in foreign policy as well as domestic policy; and therefore, though it seems like the Republicans are on course to retain control of the Senate, investors do not seem to be too bothered about it at this stage.
According to reports, Reliance Securities said that the uptick in the rupee was supported by foreign portfolio flows. "We could see Reserve Bank of India''s presence in the market today to curb volatility," it added.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 235.46 points higher at 41,575.62 and broader NSE Nifty rose 66.45 points to 12,186.75. According to provisional exchange data, foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 5,368.31 crore on Thursday.