Rupee Gains Sharply Against The Dollar, Tracking A Fall In Oil Prices

Rupee Today: The rupee strengthened against the dollar as oil prices fell to their lowest level since Russia invaded Ukraine.

Rupee Gains Sharply Against The Dollar, Tracking A Fall In Oil Prices

Rupee Today: Indian currency stronger versus the dollar, tracking oil price fall

The rupee strengthened against the dollar as oil prices fell to their lowest level since Russia invaded Ukraine and eased concerns about India's trade deficit and the inflation outlook.

Coming off an extended weekend break, the partially convertible rupee firmed to 79.2800, compared with its Friday's close of 79.6550, Reuters reported.

Bloomberg quoted the rupee at 79.3925 per dollar, up from 79.5363 on Friday. The currency, after opening at 79.5912, traded in the 79.2775-79.5938 range against the greenback, according to the news agency.

PTI reported that the Indian currency gained 44 paise to 79.30 against the US dollar in early trade. 

At the interbank foreign exchange, the rupee opened sharply up at 79.32 against the dollar, then gained further ground to 79.30, registering a rise of 44 paise over the last close.

In the previous session on Friday, the rupee depreciated 12 paise to close at 79.74 against the US dollar.

Forex markets were closed on Monday and Tuesday for Independence Day and Parsi New Year, respectively.

Besides, a positive opening in the domestic equities, with the Sensex breaching the key 60,000 level, a moderating inflationary pressures boosted investor sentiments, according to PTI quoting forex dealers.

Foreign institutional investors remained net buyers in the capital market on Tuesday as they purchased shares worth Rs 1,376.84 crore, according to the latest exchange data.

After turning net buyers last month, foreign investors have continued to invest in Indian equities and have pumped in Rs 22,452 crore in the first two weeks of August.

The international benchmark, Brent crude, recovered somewhat from six-month lows early Wednesday after data showed US stockpiles fell.

But on Tuesday, Brent crude prices dropped around 3 per cent to slump close to $92 a barrel amid worries about a potential global economic slowdown.

Oil prices have dropped to levels last seen before Russia invaded Ukraine, which is expected to ease worries about India's huge trade deficit and inflation prospects.

India's trade imbalance for July was $30 billion, and for seven consecutive months, consumer inflation has exceeded the Reserve Bank of India's upper tolerance limit.

A trader at a foreign bank said that the "more oil falls, the less will be the need to hedge for extreme downside on the rupee".

He added that the combination of soft oil prices, high US Treasury yields and healthy risk appetite suggest the rupee will remain in a 78.50-80 per dollar trading band.

Tuesday saw an increase in US Treasury yields as speculation increased that the Federal Reserve will likely maintain its hawkish position despite the July inflation statistics.

Policymakers there have said they will keep raising interest rates to combat the threat of inflation.

The minutes of the July Fed meeting will be released later on Wednesday. The 2-year yield is practically at the same level as the 10-year yield, which is higher than where it was before the softer-than-expected US inflation report.

Ahead of the Fed minutes, the dollar index was unchanged.

.