Rupee spurts 52 paise to 4-week high as dollar weakens

The rupee surged by 52 paise to close at a four-week high of 75.66 against the US dollar on Wednesday, bolstered by gains in domestic equities and a weak greenback in global markets.

The rupee rose for a third straight session gaining more than 1 per cent against the dollar this week so far as more countries look to reopen their economies.

The US dollar dropped ahead of the Federal Reserve’s policy announcement later on Wednesday and European Central Bank’s meeting on Thursday. The dollar index was trading 0.28 per cent down at 99.58.

At the interbank foreign exchange, the rupee opened at 75.94. During the session, it touched an intra-day high of 75.60 and a low of 75.96.

The domestic unit finally settled at 75.66, registering a rise of 52 paise over its previous close. On Tuesday, the local unit had settled at 76.18 against the US dollar.

Positive start of domestic stocks supported the local unit. Besides, market sentiments improved as more countries are announcing gradual lifting of lockdowns that have been imposed to contain coronavirus infection.

“Apart from the Fed policy outcome, market participants will also be keeping an eye on Q1 advance GDP number which will also be important to watch and a weaker-than-expected number could keep the greenback weighed down against its major crosses,” Motilal Oswal Financial Services Forex & Bullion Analyst Gaurang Somaiyaa said.

“We expect the rupee (Spot) to quote in the range of 75.20 and 76.20,” he added.

Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities said “Fed policy is due tonight and European Central Bank (ECB) on Thursday. Investors are cautious before major policy announcements. Not much is expected from Fed with regards to change in policy but the statement will be of utmost importance”.

Foreign institutional investors remained net sellers in the capital market, as they sold equity shares worth Rs 122.15 crore on Tuesday, according to provisional exchange data.

Traders said risk appetite has also improved on the back of easing lockdown restrictions in major global economies. However, investor sentiment 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 crossed the 1,000 mark and the number of cases climbed to over 31,300 on Wednesday, according to the Union Health Ministry.

The number of cases around the world linked to the disease has crossed over 31.39 lakh and the death toll has topped 2.18 lakh.

“The bias is skewed on the downside since economic risks stemming from the virus still remain. Although there is some respite, for the time being, rupee bulls will have to gauge whether the impact sustains. The domestic currency is seen trading in a band of 75.20 to 76.60 in the near term,” said Sugandha Sachdeva, VP-Metals, Energy & Currency Research, Religare Broking.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.3710 and for rupee/euro at 82.5927. The reference rate for rupee/British pound was fixed at 94.7774 and for rupee/100 Japanese yen at 71.23.

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