Strengthening for the 5th day, the rupee on Friday appreciated by 62 paise to close at 80.78 (provisional) against the US dollar, as moderating US CPI data coupled with a fall in the dollar index boosted investor sentiments. Forex traders said positive domestic equities and sustained foreign fund inflows also supported the local unit.
At the interbank foreign exchange market, the local unit opened at 80.76 and touched an intra-day high of 80.58 and a low of 80.99 against the greenback. The local unit finally settled at 80.78, registering a rise of 62 paise over its previous close of 81.40.
Anil Kumar Bhansali, head (treasury) at Finrex Treasury Advisors, said, “The rupee opened higher at 80.59 as dollar index fell and was last quoted at 107.50. Asian currencies gained as CNH rise to 7.05 but then fell to 7.12 levels. The rupee will remain within a range of 80.20 to 81.50 with a major support at 80.50 and 100 per cent Fibonacci reversal at 79.92."
Bhansali added that it looks like that 79.92 should hold as trade deficit concerns and exports concerns will arise below this level. “The RBI may start accumulating the dollar near to 80 levels after gaining about Rs. 3.00 to replenish its kitty."
Anuj Choudhary, research analyst at Sharekhan by BNP Paribas, said, “The Indian rupee appreciated on weak US dollar and positive domestic markets. Sustained FII inflows also supported rupee."
However, a surge in crude oil prices capped sharp gains. US inflation and core inflation declined to 7.7 per cent and 6.3 per cent in October from 8.2 per cent and 6.6 per cent in September, respectively, amid hopes that inflation may have peaked and Fed will not raise rates aggressively, Choudhary said.
“We expect the rupee to trade with a positive bias on rise in risk appetite in global markets and weakness in the greenback," Choudhary said.
Traders are expected to remain cautious ahead of industrial production data from India and consumer sentiment data from the US on Friday, he added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.82 per cent to 107.31.
Rahul Kalantri, vice-president (commodities) of Mehta Equities, said, “The dollar index crashed vertically and slipped below the 108 mark on cooling US CPI data. The dollar index also settled lower at 107.750, exhibiting a loss of 2.45 per cent, while the 10-year bond yield slipped below 3.90 per cent."
Kalantri added that the dollar index is expected to remain weak and could test 105.00 levels in the short term.
Global oil benchmark Brent crude futures surged 2.56 per cent to USD 96.07 per barrel.
On the domestic equity market front, the 30-share BSE Sensex advanced 1,181.34 points or 1.95 per cent to end at 61,795.04, while the broader NSE Nifty gained 321.50 points or 1.78 per cent to 18,349.70.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday as they purchased shares worth Rs 36.06 crore, according to exchange data.
(With Inputs From PTI)
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