Rupee rises by 21 paise to over 1-week high as dollar weakens

The rupee strengthened by 21 paise to close at more than one-week high of 73.45 against the US dollar on Friday as the greenback weakened in the global markets.

At the interbank forex market, the domestic unit opened higher at 73.47 against the dollar and touched a day's high of 73.15 as the dollar fell against its major rivals.

The local unit later lost some ground to close up by 21 paise at 73.45, a level not seen since September 7. On Thursday, the rupee depreciated by 14 paise to end at 73.66 against the US dollar.

The rupee advanced largely due to broad dollar decline globally, Devarsh Vakil, Deputy Head Retail Research, HDFC Securities, said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 92.85.

"The dollar declined amid the Fed's guidance that interest rates will remain low for longer. The news of FTSE rebalancing related inflows of USD 800 million will provide support to the rupee at lower levels," Vakil said.

The rupee rose in the first half of the session but was weighed down in the latter half following escalating tension on Indo-Pak border. More clarity on the same is likely to trigger volatility for the currency in the next few sessions, Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services said.

"Major crosses have been volatile after Federal Reserve, ECB and the BoJ released their policy statements in the last couple of sessions. Volatility for the dollar is expected to remain as no major economic data is expected to be released from the US. We expect USDINR (Spot) to quote in the range of 73.20 and 73.80," Somaiya added.

On weekly basis, the domestic currency gained 8 paise against the US dollar.

"The RBI chose to mop up these inflows aggressively through the week, given more inflows are likely to hit the market in the coming sessions and limited further gains of the currency," Sriram Iyer, Senior Research Analyst at Reliance Securities said.

Asian currencies appreciated this Friday and lent support to the domestic unit, Iyer said. "In coming sessions, the Indo-China border and Brexit uncertainty will occasionally keep the dollar bulls active," Emkay Global Financial Services Head of Research- Currency Rahul Gupta said.

Gupta further said, "This week the spot respected both the crucial support of 73 and the resistance of 73.75. Even next week, we expect the sideways trend to continue. Unless the support zone of 72.90-73 doesn't break, the spot will trade higher towards 73.75." On the domestic equity market front, the BSE Sensex, which opened on a firm footing, came under fag-end selling pressure and closed at 38,845.82, down 134.03 points or 0.34 per cent. The broader NSE Nifty slipped 11.15 points or 0.10 per cent to finish at 11,504.95.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 249.82 crore on a net basis on Thursday, according to exchange data.

Brent crude futures, the global oil benchmark, rose 0.51 per cent to USD 43.52 per barrel. 

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