Rupee settles with marginal gain of 2 paise against U.S. dollar amid recovery in greenback

At the interbank foreign exchange, the domestic unit opened higher at 69.40 and further went to touch the day’s high of 69.34.

The rupee on May 27 gave away its morning gains and closed with a marginal rise of 2 paise at 69.51 against the U.S. dollar amid a recovery in the greenback against Asian currencies and foreign fund flows.

Forex traders said the rise in the rupee was in line with uptrend in equities and foreign fund inflows. However, rising crude oil prices dampened the sentiment of traders.

At the interbank foreign exchange, the domestic unit opened higher at 69.40 and further went to touch the day’s high of 69.34.

The local currency, however, pared gains and finally settled at 69.51, registering a rise of 2 paise over its previous close. On May 24, the domestic unit had closed at 69.53.

“Foreign funds back with a bang in domestic equity market with buying $555 million in last week after Prime Minister Narendra Modi lead NDA government got a second term with strong mandate. PM Modi’s win assures policy continuity and stability, and economic reform will lead to fresh dollar inflows in domestic market,” said V.K. Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

The yield of benchmark 10-year government bonds fell to a 13-month low of 7.165% after the Reserve Bank of India announced open market operations in June, Retail Research Head Deepak Jasani said.

Foreign institutional investors (FIIs) were net buyers in the capital markets, buying shares worth 2,026.33 crore on May 24, according to exchange data.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.12% to 97.72.

“Healthy FPIs flows and decisive general election results appear to have helped INR strengthen against U.S. Dollar,” Rajesh Cheruvu, the Chief Investment Officer, WGC Wealth said adding that domestic policy continuity and stability seems to have amplified the strength of domestic currency over its regional and emerging peers.

Brent crude futures, the global oil benchmark, rose 0.70% to trade at $69.17 per barrel.

The Financial Benchmark India Private Ltd. (FBIL) set the reference rate for the rupee/dollar at 69.6096 and for rupee/euro at 77.9744. The reference rate for rupee/British pound was fixed at 88.3021 and for rupee/100 Japanese yen at 63.55.