There has been a tremendous increase in the rupee against the dollar.
The rupee witnessed a rise for the second consecutive day. The special thing is that the rupee has seen an increase of 50 paise or more for the second consecutive day. If we look at the figures, the rupee has seen an increase of more than 1 rupee against the dollar in two days. It is rare to see such a huge rise in the rupee in two consecutive days. According to experts, the rupee has seen a rise due to the intervention of RBI in the currency market and the fall in crude oil prices. At the same time, the rupee has also been seen benefiting from the calmness of the dollar.
According to experts, the impact of some signs of relief in the conflict between America and Iran and the fall in American bond yields has also been seen on the rupee. As earlier also in the report of TV9 Hindi Digital, it was indicated that further increase in rupee may be seen in the coming days. According to experts, the environment remains such that in the coming days the rupee may be seen at the level of 94 against the dollar.
Now the biggest question is whether the big crisis for the rupee which has reached the level of 97 has been averted? Can we see a rise in the rupee in the coming days? Is the rise in rupee against dollar short term? Let’s try to find answers to these questions by looking at the currency market data?
There was a sharp rise in the rupee
On Friday, the rupee strengthened for the second consecutive session and closed at 95.73 (provisional) against the US dollar due to softening of crude oil prices and alleged intervention by the Reserve Bank. Forex traders said markets got some relief after comments by US Secretary of State Marco Rubio indicated that diplomatic talks over the situation in Iran were moving in a constructive direction. Apart from this, rise in domestic equities and fall in US treasury yields also supported the rupee.
At the interbank foreign currency exchange market, the rupee opened at 96.30 against the US dollar, then touched an intraday high of 95.30 and low of 95.68 against the US dollar in intraday trade. At the end of the trading session on Friday, the rupee was at 95.73 (provisional), which was 63 paise higher than its previous closing price. On Thursday, the rupee improved by 50 paise from its lowest ever closing price and closed at 96.36 against the US dollar. This means that in two consecutive days the rupee has seen an increase of 113 paise i.e. Rs 1.13.
What are experts saying on this rise?
Mirae Asset Sharekhan’s Research Analyst Anuj Chaudhary said that we expect the rupee to trade with a negative trend due to uncertainty between America and Iran, which may put pressure on the rupee. However, optimism over the peace deal and softening crude oil prices may support the rupee at lower levels. US treasury yields are also softening, which may also support the domestic currency. USD-INR spot price is expected to trade in the range of 95.50 to 96.30.
Sahil Kapoor, SVP, Products and Market Strategist, DSP Mutual Fund, said in a research note that this is the time to buy rupee-linked assets and not bet against them. He said that currencies, interest rates and flows are inherently cyclical. Betting against the rupee at these depressed REER levels and tight inflation differentials is a low probability trade. On the contrary, the data shows that now is the time to invest in rupee denominated assets, both equities and bonds.
What are the market figures saying?
Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading at 99.29, showing a decline of 0.04 per cent. Brent crude, the global oil benchmark, was trading 2.18 percent higher at US $ 104.82 per barrel in futures trade. On the domestic equity market front, Sensex closed 231.99 points higher at 75,415.35, while Nifty rose 64.60 points to 23,719.30.
According to exchange data, foreign institutional investors sold shares worth Rs 1,891.21 crore on a net basis on Thursday. Meanwhile, Commerce and Industry Minister Piyush Goyal on Thursday said the government is considering several measures to control the widening current account deficit (CAD) amid a weakening rupee and widening trade deficit.
