Rupee extends gains past 70 vs USD for first time since Aug 27

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Updated: November 29, 2018 11:44:09 AM

The rupee gained past 70 against the US dollar mark for the first time since August 27 this year and touched a high of 69.9525 against the US dollar on Thursday morning

The rupee has strengthened sharply, gaining more than 5% since the dog days of October.

The rupee continued to appreciate in the early morning trade deals on Thursday, rising to a three-month high against the dollar. The domestic currency gained past 70 against the US dollar mark for the first time since August 27 this year and touched a high of 69.9525 against the US dollar on Thursday morning, as global crude oil prices slipped below the 60$ per barrel mark amid a smart recovery in domestic stocks markets.

Today, the local currency opened higher by 51 paise at 70.11 per dollar compared with the Wednesday’s closing of 70.62. It has appreciated by 6% from its all-time low of 74.48 per dollar. Dollar’s weakness against its peers also aided the domestic currency.

“If we look at the daily chart, 69-70 is the level where we have seen breakout and currency rallying till 74.68 within span of 3 months. Now we have come back again to the same level. So we expect USDINR to bottom out near 69-70. Not just weak US dollar but inflows in our Debt market is also helping Indian Rupee appreciate against US Dollar. RBI is also shoring up its forex reserve by buying US Dollar as INR is trading near 4 month low,” Bhavik Patel – Sr. Technical Analyst, Tradebulls Securities on Currency told FE online.

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The rupee strengthened after the Federal Reserve Chairman Jerome Powell said that US interest rates were just below neutral, signalling that the rate hike cycle was nearing its end. Also, recent softening in crude oil prices and hopes of some positive developments in the US-China trade ties in the upcoming G20 summit also helped the currency.

“This means US Fed may not hike rates as aggressively as they had intended in Oct 2018 for year 2019. This is ofcourse weak for US Currency and we saw all asset class like equity, commodity and bond market rallying. USDINR is near to its support level of 70,” he added.

The rupee has gained over 5% so far this month since the dog days of October. Meanwhile, bond yields were at their lowest levels since early May as most Asian markets advanced following the US Federal Reserve’s comments.

“Domestic equities are quite volatile too. Hence we may see importers rushing to cover their exposure for 2-3 months. The near-term range for the rupee is 69.50 to 71.00 levels. The focus will now shift to India’s GDP data, RBI monetary policy meeting, OPEC meeting and outcome of state election results. These data and events will provide further discussion to the rupee. The RBI has sold it’s FX reserves sharply in the last couple of months when the rupee was under huge pressure during August to October. Hence this a good opportunity for the RBI to rebuild its reserves. Hence over the medium term once again the rupee may move towards 72-73 levels,” said Rushabh Maru – Research Analyst , Anand Rathi.

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