Rupee breaches 64-level

By: |
Mumbai | Published: August 29, 2017 7:07:34 AM

Sees biggest one-day appreciation against dollar in three weeks, gains 13 paise to close at 63.90

rupee, Public sector banks, forex, foreign portfolio investors, HDFC Standard Life Insurance, GIC Re, ICICI Lombard General InsuranceOn Monday, the rupee hit a high of 63.85 to the dollar in intra-day trade. (Reuters)

The rupee on Monday saw its biggest one-day appreciation in almost three weeks, with the currency closing at 63.91 to the dollar following a significant weakening of the greenback. The currency appreciated 0.19% against the dollar on Monday. The dollar fell against most of its peers after the market failed to find any guidance on the US monetary policy in Fed chief Janet Yellen’s speech at the Jackson Hole summit on Friday.The market has been closely watching the Fed’s statements for possible hints on the US monetary policy as well as any guidance on its proposed balance sheet shrinkage.

On Monday, the rupee hit a high of 63.85 to the dollar in intra-day trade. Forex dealers indicated that the currency found a resistance at 63.85 level even as nationalised banks came into the picture. “Public sector banks are likely to have bought huge amount of dollars on behalf of the central bank at 63.86-63.88 levels,” said a forex dealer. The RBI is believed to have used the rupee appreciation phase to shore up its forex reserves which now stand at $393.40 billion. On a year-to-date basis, the currency has given return of 6.27%.

Apart from the dollar weakness, foreign inflows have also contributed considerably towards the rise in the rupee. So far this year, foreign portfolio investors (FPIs) have infused a net of $19.55 billion into Indian debt.Yield-hungry FPIs have already utilised the investment limits permitted in government securities and corporate bonds. The latest depository data show that the general category FPIs have utilised 99.11% of the permitted limit of Rs 1.87 lakh crore in central G-Secs, while long-term FPIs have utilised 86.77% of the allotted limit of Rs 54,300 crore. At the same time, foreign investors have utilised 99.54% of the permitted limit of Rs 2.44 lakh crore in corporate bonds. At the same time, foreign investors have poured $6.8 billion into Indian equities this year. Investment bankers believe FPIs might infuse at least $1.5 billion in upcoming insurance IPOs. Five insurance companies — SBI Life Insurance, HDFC Standard Life Insurance, New India Assurance Company, General Insurance Corporation of India (GIC Re) and ICICI Lombard General Insurance — are expected to raise more than Rs 30,000 crore in next
few months.

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