Rising for the second straight day, the rupee gained 11 paise against the US dollar on Thursday, October 14, to settle at 75.26 (provisional) amid heavy buying in domestic equities and weakness in the American currency - both of which strengthened investor sentiment.
At the interbank foreign exchange market, the domestic unit opened at 75.27 against the dollar, and moved in a range of 75.20 to 75.37 during the trading session. In an early trade session, the domestic unit gained 12 paise to 75.25 against the greenback.
The domestic currency settled at 75.26 against the American currency, registering a rise of 11 paise against its previous close. On Wednesday, October 13, the local unit settled at 75.37 against the dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.28 per cent to 93.81.
According to forex traders, fresh foreign capital inflows also helped the domestic unit post gains for a second straight day. However, surging crude prices in the international market restricted the rupee's gain, according to traders.
What analysts say:
''....the USDINR pair should correct down towards 74.80 and 74.50, which has an 80 per cent probability. The key player for rupee management- “The RBI”, has so far done a remarkable job by not intervening too aggressively in selling dollars and let it be driven by market forces,'' said Mr Amit Pabari, MD, CR Forex.
''However, considering the huge chunk of inflows paring the way, it will be watchful whether it also remains active downside. Overall, the medium-term trend for the USDINR pair remains bullish. But for a healthy and steady-up move, correction is required,'' added Mr Pabari.
Currency Desk, Emkay Global Financial Services:
“There is a pullback witnessed in DXY, especially after the Fed minutes hinted that the central bankers could start tapering, but for USDINR the risk of surging crude oil prices is still there. As long as the USDINR spot is trading above 75, view is positive.
Next week is pretty light on economic data front but focus will be on any IPO related announcement which can weigh on USDINR spot. So next week's range could be 74.8—75.70 with sideways bias.''
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Limited:
''USDINR spot closed 11 paise lower at 75.25 on the back of rise in stocks and weakness in the US Dollar Index, after real yields fell in US. Over the next week, USDINR may continue to see more range bound price action between 75.00 and 75.80 levels in October futures.
For USDINR to break down below 75.00 or challenge 76.00, it needs either the US Dollar Index to head lower or equity markets to head lower.''
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 568.90 points or 0.94 per cent higher at 61,305.95, while the broader NSE Nifty surged 176.80 points or 0.97 per cent to 18,338.55.
Shrikant Chouhan, Head - Equity Research (Retail), Kotak Securities:
''The Q2FY22 result season has begun with large cap IT companies reporting healthy numbers. rupee's depreciation has also played its part in keeping the IT stocks in the green. Amidst all these events, markets continues to rally with both BSE Sensex and Nifty gaining over 2.5 per cent each during a curtailed week.
Small & Midcap indices outperformed during the week. BSE Midcap Index gained 3.6 per cent, while BSE Smallcap Index gained 2.8 per cent.''
According to exchange data, the foreign institutional investors emerged as net buyers in the capital market on October 13, as they purchased shares worth Rs 937.31 crore. Brent crude futures, the global oil benchmark, increased 1.30 per cent to $ 84.26 per barrel.