The rupee appreciated against the dollar on Friday after crude prices fell to seven-month lows in the global market and foreign institutional investors infused fresh capital into the domestic markets.
The rupee traded below the 73 per dollar mark today for the first time since October 1, rising over 70 paise to an intra-day high of 72.86 against the US dollar. The rupee started on a strong note today, rising nearly 30 paise against the US dollar from its previous close, after crude prices fell to seven-month lows in the global market and foreign institutional investors infused fresh capital into the domestic markets.
The rise was also supported by dollar-selling by exporters and banks, the dollar’s weakness against some currencies overseas and a higher opening in the domestic stock markets amid strong global cues. Earlier on Thursday, the rupee posting its biggest single-session spurt in three weeks and rallied by 50 paise to close at 73.45 against the US dollar. According to traders, increased selling of the greenback by exporters, softening crude oil prices and upbeat economic numbers helped the rupee to recover against the US dollar.
“The local unit closed higher after days of battering led by American dollar selling by exporters and softening oil prices… The upbeat corporate numbers and easing global trade frictions also supported the rupee,” Geojit Financial Services said in a note. “Today, RBI will release its weekly FX reserves data and in the global front, US Nonfarm Payrolls (Oct) is due later in the day. Oil prices will be in focus as US sanctions on Iran will kick start from Sunday midnight,” the note said.
The brokerage pointed out that is pullback continues, then 72.83 per dollar will be a major level for the rupee above which it may test 71.42/$. “While on the other end, 74.58 is the crucial support to watch out,” the note added.
Foreign institutional investors (FIIs), which had been on a selling spree on the domestic bourses, made fresh purchases worth Rs 348.75 crore on Thursday, provisional data from the BSE showed. Meanwhile, the Sensex and Nifty opened higher on Friday tracking strong global cues. Oil prices fell on Friday as surging output by the world’s three largest producers outweighed supply concerns from the start of U.S. sanctions next week against Iran’s petroleum exports, said a Reuters report.