Rupee rises 28 paise to 71.86 against dollar in early trade

The rupee, opening at 71.87 at the interbank foreign exchange, registered a rise of 27 paise by gaining a high of 71.85 on Thursday

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Mumbai: As predicted in Sirf News earlier, the rupee appreciated by 28 paise to 71.86 against the US dollar in early trade on Thursday as gains in domestic equity market enthused investors. At the interbank foreign exchange, the rupee opened at 71.87, then gained further ground and touched a high of 71.86, registering a rise of 28 paise over its previous close. The rupee had settled at 72.12 against the US dollar on Wednesday.

The investor sentiment revived after China and the United States said they will resume trade talks. The Indian currency has appreciated by 55 paise in the past two sessions. “India’s rupee rises for the second day as the risk on sentiments drove global equities higher after China and the US said they would resume trade talks in October. The rupee is expected to follow the movement of Chinese currency as it has been doing since August month,” said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

Sharma further noted that spot USD/INR is having support at 71.40 and resistance for the same is seen at 72.25 in the near term.

The domestic unit, however, was shaky through the day. It was trading at 71.93 against the dollar at 0955 hrs.

Forex traders said the Indian currency gained following weakness in the US dollar.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.30% to 98.15.

Market participants, however, said weak domestic equity market, sustained foreign fund outflows and rising crude prices weighed on local currency.

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 561.17 crore on Thursday, according to provisional exchange data.

“Foreign fund outflow has been the major concern for the Indian currency and that would continue to weigh on rupee if the trend does not change on a sustainable basis,” Sharma said.

Brent crude futures, the global oil benchmark, rose 0.18% to trade at USD 60.81 per barrel.

The 10-year government bond yield was at 6.58% on Thursday.

On the domestic market front, The 30-share index settled 80.32 points, or 0.22%, lower at 36,644.42. The broader Nifty, on the other hand, ended 3.25 points, or 0.03%, higher at 10,847.90.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 72.0700 and for rupee/euro at 79.1050. The reference rate for rupee/British pound was fixed at 87.2806 and for rupee/100 Japanese yen at 67.89.

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