At 9.22 am, the local currency was trading 25 paise up at 66.76. It had closed 2 paise up to settle at 67.02 a dollar on Friday.
Indian rupee continued its rally for fifth consecutive day and closed 25 paise up at 66.74 against the US dollar on Monday at the Interbank Foreign Exchange on account of selling of American currency by banks and exporters and decreased hopes that US Fed Reserve will hike rates during its next policy review meet. The local currency had opened 23 paise up at 66.76 against the US dollar. On Friday, the rupee had ended 2 paise up at 67.02 a dollar level.
The Indian currency has touched a high and low of 66.69 and 66.78 levels, respectively in Monday’s trade.
Domestic stock markets opened on a firm note on Monday morning but later on wiped off their initial gains to close lower, driven by weak earnings from ICICI Bank and Larsen & Toubro. Sensex slipped 48.74 points to end at 28,003.12, while NSE Nifty fell 1.95 points to end at 8,636.55.
Dollar weakness against other emerging currencies also supported the rupee rally. Japanese Yen rose for the fifth day on hopes of an interest-rate increase in the US aided China’s efforts to stabilise its currency. Dollar fell after traders gave up hopes that Federal Reserve interest-rate increase until September next year.
Anindya Banerjee, currency analyst, Kotak Securities, said that he expects to see a range of 66.40 and 67.10 for rupee in the near term. He has listed out 5 pointers that are behind the Indian currency’s rally:
- Poor GDP data from US causing a broad based sell-off in US Dollar
- Strong inflows into Indian debt as yield differentials remains attractive and volatility in currency remains low. Lower commodity prices and abundant monsoon is keeping inflationary pressures low
- Strong inflows into equity markets. Domestic equities are rising on the back of abundant global liquidity, good monsoons and expectations surrounding GST
- Poor global growth and volatile US growth may keep rate hike from US Fed at bay
- Offshore Chinese Yuan has seen a 1.4% appreciations from the lows of July.
The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 66.74 and for Euro stood at 74.51 on August 1, 2016. While the RBI’s reference rate for the Yen stood at 65.08, the reference rate for the Great Britain Pound (GBP) stood at 88.43.