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Rupee hits one-month high; below 79 per dollar

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Rupee drops significantly below 79 per dollar

The rupee on Tuesday strengthened for the fourth straight session and fell well below 79 per dollar, largely driven by foreign capital inflows and a significant reversal in a weaker dollar.

Bloomberg quoted the rupee at 78.6512 against the greenback as compared to its previous close of 79.0262 on Monday.

The rupee on Tuesday jumped 41 paise to close at 78.65 against the US dollar, PTI reported.

In the interbank forex market, the local unit strengthened against the greenback at 78.96 and witnessed an intra-day high of 78.49 and a low of 78.96. It finally closed at 78.65 against the US currency, up 41 paise from the previous close, PTI said.

The rupee had closed at 79.06 against the US dollar in the previous session.

“Despite the odds, the Indian rupee and equities outperformed the sector as foreign institutions turned into net buyers of equities and debt. Long liquidations of the dollar, FPI inflows, lower crude oil prices and correction in high frequency data greatly contributed Well supported. Rupee gains,” Dilip Parmar, Research Analyst, HDFC Securities, told PTI.

Proceeding further, the bias remains to the downside as the pair is closing below the 50-day simple moving average and a level below 78.50 will give way to 77.60. “However, one must adjust one’s position according to US-China geopolitical updates”, he said.

The reversal from repeated lows in the rupee and the breach of 80 per dollar has been significant and sharp.

Foreign institutional investors were net buyers in the capital market on Monday, buying shares worth Rs 2,320.61 crore, according to the latest exchange data.

The rupee’s fortunes are propelled by foreign investors turning into net buyers of Indian assets and easing bets on aggressive Federal Reserve monetary action amid fears of a recession, falling to its lowest level since mid-June.

The dollar continued its decline on Tuesday, falling to its lowest level in two months against the recovery of the Japanese yen and losing ground on other peers as investors continued to position for a less aggressive pace of Fed rate hikes.

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