Rupee rises 10 paise to 68.86 against U.S. dollar as RBI swap auction elicits strong response

Under the rupee-dollar swap auction conducted on March 26, the RBI received bids for $16.31 billion, against the notified amount of $5 billion.

The rupee appreciated by 10 paise to end at 68.86 against the U.S. dollar on Tuesday following a robust response to the Reserve Bank of India’s (RBI’s) maiden rupee-dollar swap auction.

Sustained foreign fund inflows and heavy buying in domestic equities also propped up the local unit, Forex traders said.

Under the rupee-dollar swap auction conducted on March 26, the RBI received bids for $16.31 billion, against the notified amount of $5 billion.

At the Interbank Foreign Exchange (Forex) market, the rupee opened strong at 68.88 against the greenback but surrendered the gains to slip to a low of 68.98.

However, it clawed back lost ground and finally ended at 68.86, up 10 paise against its previous close of 68.96 per dollar.

“The success of India’s $5 billion swap auction will decide whether it will become a popular instrument in the central bank’s liquidity tool box,” said V.K. Sharma, head PCG and capital markets strategy, HDFC Securities.

“The rupee appreciated further as foreign institutional flows continue to find their way into Indian markets,” said Sunil Sharma, chief investment officer, Sanctum Wealth Management.

Foreign institutional investors (FIIs) pumped in Rs 150.40 crore on a net basis on March 25, provisional data showed.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07% to 96.50.

Meanwhile, global crude prices were trading higher and this restricted the rupee’s upmove.

Brent crude futures, the global oil benchmark, was trading 0.88% up at $67.80 per barrel.

Meanwhile, benchmark Sensex rebounded about 425 points, or 1.12%, to end at 38,233.41 on Tuesday. The broader NSE Nifty climbed 129 points, or 1.14%, to 11,483.25.

The Financial Benchmark India Private Ltd. (FBIL) set the reference rate for the rupee/dollar at 68.8469 and for rupee/euro at 77.8663. The reference rate for rupee/British pound was fixed at 90.7737 and for rupee/100 Japanese yen at 62.55.