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Rupee Recovers on Soft Dollar, up 15 Paise at 66.73
Representative photo. (GETTY IMAGES)
Mumbai: The rupee on Tuesday made a smart rebound, gaining a good 15 paise to end at 66.73 on fresh bout of dollar selling by exporters and banks amid weak overseas sentiment.
A smart rally in local equities and light unwinding of long dollar positions by foreign banks mainly helped the rupee regain strength.
Weakness in the dollar against other currencies overseas on unexpected fall in US manufacturing index also made the rupee stronger, a forex dealer said.
Drawing comfort from buoyant global markets, domestic equities staged a solid rebound from their multi-month lows on value buying.
The home currency resumed on a firm footing at 66.80 from Monday's close of 66.88 at the Interbank Foreign Exchange (Forex) market and moved in a narrow range with positive bias throughout the day before ending at 66.73, showing a smart gain of 15 paise, or 0.22 percent.
It had ended lower by 17 paise at 66.88 on Monday. In worldwide trade, the greenback turned bit soft and kept retreating against its major trading partners during the past Asian session after key US macro data fell short of estimates overnight and some caution ahead of US inflation data later in the day.
Better-than-expected numbers will likely fuel hopes of a December hike.
Pound Sterling fell back after a marked rebound in UK inflation for both the headline and Consumer Price Index (CPI) dampen bets for an imminent BoE rate cut.
The dollar index, which measures its broader strength against a basket of currencies, was marginally down at 97.79. The RBI on Tuesday fixed the reference rate for the dollar at 66.7268 and euro at 73.5463.
In cross-currency trades, the rupee retreated against the pound sterling to finish at 81.90 from 81.29.
However, it recouped against the euro and finished at 73.40 as compared to 73.53 and also rebounded against the Japanese yen to settle at 64.19 from 64.23 per 100 yens earlier.
The flagship BSE Sensex shot up by a whopping 521 points to end at 28,050.88, while broader Nifty surged over 156 points to close at 8,677.90.
In the meantime, Foreign portfolio investors (FPIs) remained net sellers in the domestic equity markets and sold a net Rs 456.64 crore on Tuesday as per provisional data.
In the forward market, premium for dollar maintained its downtrend due to consistent receiving by exporters. The benchmark six-month premium for March dropped to 160-162 paise from 164.5-166.5 paise and the forward-September 2017 contract also fell to 336-338 paise from 342-344 paise.
Crude prices extended its fall for the second day following Iran's indication to boost its overall oil output to 4M bpd this year. Opec agreed last month to work to try and reduce supply to raise a price that has halved in the past two years. Brent crude oil was trading just below $52 a barrel on Tuesday, close to its highest this year.
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