The rupee on Tuesday recovered by 10 paise to close at 75.63 against the US currency on increased risk appetite following easing Sino-US trade war concerns.
The US dollar declined against major Asian currencies and the euro after a US official said that the country was not planning any punitive action against China over the handling of the coronavirus pandemic.
Forex traders said the rupee is trading in a narrow range as sustained foreign fund outflows and concerns over coronavirus outbreak weighed on the local unit.
At the interbank foreign exchange, the rupee opened at 75.62 and finally settled at 75.63, registering a rise of 10 paise over its previous close. During the day the domestic unit saw an intra-day high of 75.50 and a low of 75.72 against the US dollar.
On Monday, the rupee had settled at 75.73 against the US dollar.
Domestic stocks advanced in early trade with the benchmark Sensex trading 85.45 points higher at 31,800.80 and broader Nifty 15.30 points at 9,308.80.
Later, stocks gave up gains and BSE index settled 261.84 points or 0.83 per cent lower at 31,453.51, and the NSE Nifty fell 87.90 points or 0.95 per cent to close at 9,205.60.
“Other Asian currencies have also started with gains against the US Dollar this Tuesday morning amid risk appetite returning to the market as many countries planned to ease the restrictions on the lockdown enforced due to the COVID-19 pandemic,” Reliance Securities said in a research note.
Forex traders said the rupee would remain an interplay between COVID-19 situation and the Sino-US tensions.
“US has threatened to impose higher tariffs to penalize China and even warned of stringent action. As long as this kind of rhetoric continues to dominate the headlines, Asian currencies, along with Chinese Yuan can depreciate against US Dollar,” said Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities.
“Rupee cannot be immune. Therefore, over the near term, the rupee would remain an interplay between COVID situation and the Sino-US tensions. A range of 75.00 to 76.50 may unfold over the near term,” Banerjee added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.26 per cent up at 99.74.
Brent crude futures rose 8.05 per cent to USD 29.39 per barrel.
“In the last couple of sessions FIIs have been net sellers and this could keep major gains for the currency. We expect that the momentum for rupee would continue to remain negative also on the back of broad strength in the dollar against its major crosses,” said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Traders said investor sentiments remained fragile amid concerns over the impact of coronavirus outbreak on the domestic as well as the global economy.
In India, the death toll due to Covid-19 rose to 1,568 and the number of cases climbed to 46,433 on Tuesday, according to the health ministry.
The number of cases around the world linked to the disease has crossed over 36 lakh and the death toll has topped 2.51 lakh.
Meanwhile, foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 1,373.98 crore on Monday, according to provisional exchange data.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.7902 and for rupee/euro at 82.8351. The reference rate for rupee/British pound was fixed at 94.2103 and for rupee/100 Japanese yen at 70.99.
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