Mumbai, Oct 16 (PTI) The rupee stayed on upward momentum for the sixth straight session on Friday and settled 10 paise higher at 94.89 against the US dollar, backed by the Reserve Bank’s measures to curb spot dollar demand.
However, elevated crude oil prices and foreign fund outflows capped the rupee’s gains, according to forex traders.
At the interbank foreign exchange market, the rupee opened at 94.75 against the American currency. In intraday trade, it touched a high of 94.71 and a low of 95.06 before settling at 94.89, up 10 paise from the previous close.
On Thursday, the rupee appreciated 18 paise to close at 94.99 against the US dollar.
In the past six sessions, the Indian currency has gained over 2 per cent since its lowest-ever closing level of 96.88 against the greenback recorded on October 8. The rupee’s weak performance prompted the RBI to announce a slew of measures on October 10 to curb dollar demand in the spot market and curtail excessive speculative positioning.
“The rupee is now approaching a crucial support zone around 94. Persistent pressure from elevated crude oil prices, rising US Treasury yields and continued foreign equity outflows had prompted the RBI to intensify its intervention to limit the impact of currency weakness on domestic inflation and broader financial stability,” said Kaveri More, Commodity Technical Analyst, Choice Broking.
The RBI has reportedly deployed around USD 75-80 billion through spot dollar sales and dollar-rupee swaps since its special measures to attract foreign currency inflows came into effect on June 8, he said.
“Going forward, the rupee’s near-term direction will depend on the effectiveness of RBI intervention, movements in crude oil prices and US bond yields, and the pace of foreign investor flows. While continued central bank support may help stabilise the currency, sustained external pressures could limit further appreciation,” More said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading lower by 0.41 per cent at 101.445.
Brent crude, the global oil benchmark, was trading down by 0.34 per cent at USD 105.56 per barrel in futures trade.
On the domestic equity market front, Sensex climbed 413.66 points to settle at 74,729.27 while Nifty rose 148.80 points to close at 23,146.15.
Foreign Institutional Investors (FIIs) turned buyers and purchased equities worth Rs 1,165.92 crore on a net basis on Friday, according to exchange data.
The RBI data released on Friday showed India’s foreign exchange reserve dropped by USD 8.578 billion to USD 726.027 billion during the week ended October 9. In the previous reporting week, the reserves had dropped by USD 12.952 billion to USD 734.606 billion. PTI ANU HVA
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