Rupee makes U-turn, spurts 27 paise to 74.61 against USD

 The Indian rupee reversed early losses to close 27 paise higher at 74.61 against the US dollar on Tuesday amid a lacklustre greenback overseas and weak crude oil prices.

At the interbank forex market, the domestic currency witnessed heavy volatility. The local unit opened weak at 74.93 a dollar and touched a low of 74.95 and a high of 74.55 during the day.

The local unit finally closed at 74.61 against the American currency, registering a rise of 27 paise over its previous close.

On Monday, the rupee had settled at 74.88.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.05 per cent to 92.84.

“In the near term, amid the rising COVID cases in highly vaccinated developed countries coupled with uncertainty over US Fed’s next move has re-invigorated the ‘safe-haven’ status of USD,” said Rupen Rajguru, Head of Equity Investments and Strategy, Julius Baer.

On a YTD basis, the INR has depreciated against USD more than 2 per cent owing to broad-based strengthening of DXY (dollar index) coupled with strong rebound in crude oil prices (adversely impacting CAD) and rise in negative real rates (impacting FII debt flows), Rajguru said.

On the domestic equity market front, the BSE Sensex ended 354.89 points or 0.68 per cent lower at 52,198.51, while the broader NSE Nifty declined 120.30 points or 0.76 per cent to 15,632.10.

Global oil benchmark Brent crude futures rose 0.22 per cent to USD 68.77 per barrel.

Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 2,198.71 crore, as per exchange data.

“The Indian Rupee appreciated against the US Dollar on Tuesday supported by investment flows and exporters’ dollar sales which outweighed the impact of weak regional cues,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

The rupee strengthened by 0.3 per cent this Tuesday, its biggest single session rise since July 5, Iyer said.

The rupee also took support from falling oil prices with Brent and WTI both below USD 70 a barrel for the first time since the second week of May.

Earlier in the session, the rupee weakened to 74.95, its lowest level since April 23, tracking weak regional peers like Koran won, Malaysian ringgit and Singapore dollar which depreciated at least 0.2 per cent each on concerns that the spread of the highly transmissible Delta variant of the coronavirus could derail the global economic recovery.

“Technically, the USDINR Spot pair supports are at 74.53 and 74.38 and a break below both supports will pull the pair to 74.20. Resistances for the pair are at 74.70 and 74.86 and for an uptrend, the pair needs to sustain above the levels,” Iyer said.

According to Jateen Trivedi, Senior Research Analyst at LKP Securities, rupee traded very strong near 74.60 with gains on the back of major correction witnessed in crude in last few days from a peak of USD 76 to below USD 69.

“Going ahead rupee can be seen finding support at 75.00 and resistance at 74.50,” Trivedi noted.

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