Rupee's remarkable revival against Dollar continues as it races to key barrier. Reasons here

The rupee firmed 10 paise to 71.87 against the US dollar Friday on increased selling of the US currency by exporters and banks.

Besides, weakness in the greenback against some currencies overseas, increased foreign fund inflows and a higher opening of domestic equities supported the rupee, traders said. Foreign funds bought shares worth a net of Rs 2,043.06 crore Thursday, as per provisional data.

At the interbank forex market, the rupee opened higher at 71.94, and advanced 10 paise to 71.87 against the US dollar. The rupee had vaulted 34 paise to close at a two-month high of 71.97 against the US dollar Thursday on robust foreign fund inflows amid low crude oil prices.

Meanwhile, the benchmark BSE Sensex rose 96.29 points, or 0.28 per cent, to 35,356.83 in early session Friday. 

The return of the Rupee to sub-72 levels versus the Dollar represents a significant rally as compared to the almost 75-per-dollar all-time high it had hit just about a month back. This means that in just the last three days, the Rupee has strengthened, from 72.67.

The reason being cited for playing a huge role in the strengthening is the ongoing slump in global crude prices. Crude oil is India's highest import item, leaving the economy susceptible to factors outside of its control. While for the last year this was having an adverse effect, with prices rising markedly since the lows of the first few years of the Narendra Modi government, now, the trend has reversed. 

Causes of the fall of crude prices include OPEC reportedly considering a cut in supply over concerns of an impending growth slowdown. This is even as the US has become the biggest producer of crude in the world. More pertinent to India, the US has also exempted India from sanctions imposed on countries who trade in oil with Iran. 

Accordingly, prices of petrol and diesel, which had also reach an all-time high concurrently with the Rupee, have fallen markedly. From a high of Rs 84 per litre of petrol in New Delhi on October 4, the rate had fallen to Rs 77.28 per litre by Thursday.

(With ANI inputs)