The rupee rebounded from its all-time low levels and appreciated by 19 paise to close at 89.96 against the US dollar on Thursday, on softness in the US dollar index and on reports of the Reserve Bank of India’s supposed intervention. Forex traders said the greenback fell after ADP non-farm payroll data came in sharply below forecast, and the softness in the US dollar index supported the rupee at lower levels.
The rupee opened weak earlier in the day and touched a fresh all-time low of 90.43 amid selling pressure from foreign investors and rising crude oil prices. The delay over the announcement of the India-US trade deal has also weighed on the rupee.
At the interbank foreign exchange market, the rupee opened at 90.36. It slipped further to a record low of 90.43 against the greenback in initial deals, registering a loss of 28 paise from its previous closing level.
At the end of Thursday’s trading session, the rupee was quoted at 89.96 (provisional), up 19 paise over its last close.On Wednesday, the rupee breached the 90-a-dollar level for the first time to settle at a fresh all-time low of 90.15 against the greenback.Meanwhile, Chief Economic Adviser V Anantha Nageswaran on Wednesday said the falling rupee is not affecting inflation or exports.
A falling rupee helps outward shipment but makes imports costlier.
Import-dependent sectors such as gems and jewellery, petroleum and electronics may see lower benefits due to a rise in input costs, putting pressure on inflationary expectations, he said at an event on Wednesday.Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 per cent lower at 98.84. Brent crude, the global oil benchmark, rose 0.22 per cent to USD 62.81 per barrel in futures trade.
“We expect the rupee to trade with a negative bias on continued selling pressure from FIIs and a weak tone in the domestic markets. Elevated crude oil prices may also pressurise the rupee,” said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.Forex traders said multiple pressures, like foreign fund outflows from equities and lingering uncertainty over the Indo-US trade deal, are keeping investor sentiment fragile.However, weakness in the US dollar amid a disappointing jobs report and rising odds of a rate cut by the Fed in December may support the rupee at lower levels, Choudhary said.
