Rupee spurts 40 paise to over 2-month high on hopes of dollar inflows

Mumbai: The rupee surged by 40 paise to close at more than two-month high of 73.29 against the US dollar on Monday following dovish comments by the US Federal Reserve chairman on interest rates.
A strong rally in the domestic equity markets and a weak American currency in the overseas markets also supported the rupee sentiment.
At the interbank forex market, the local unit opened strong at 73.46 against the greenback and later moved in a range of 73.21 to 73.54 in the day trade.
The local unit finally closed at 73.29, the highest closing level since June 14. It had closed at 73.69 on Friday.
The rupee logged the third straight session of gain on Monday. In the three trading sessions, the local unit appreciated by 95 paise against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading unchanged at 92.68.
“The Indian Rupee appreciated against the dollar this Monday, supported by dovish statement from the Federal Reserve Chairman Jerome Powell who said that more labour market data was needed before they could begin scaling back bond purchases,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Powell also said that the US Federal Reserve Bank was still far from pulling interest rates off the record low.
The currency had initially tested an intraday high of 73.21, its highest level since June 15 on sustained dollar sales by foreign banks, but trimmed gains on dollar bids likely for the Reserve Bank of India, Iyer noted.
The US Fed chief’s speech at Jackson Hole Symposium was ‘dovish’ and expressed hope that the Fed will keep supporting the market with low interest rates, traders said.
“The Indian rupee continued Friday’s upward momentum and became the second-best performing currency among Asian basket,” said Dilip Parmar, Research Analyst, HDFC Securities.
The weakness in the dollar, a sharp surge in demand for risk assets, and expectations of high dollar inflows in the coming month through FDI and FII routes well-supported the Indian rupee, Parmar added.
“Spot USDINR is expected to head towards a psychological level of 73 once the level of 73.20 breaks and find resistance at 73.65,” he noted.
On the domestic equity market front, the BSE Sensex ended 765.04 points or 1.36 per cent higher at 56,889.76, while the broader NSE Nifty advanced 225.85 points or 1.35 per cent to 16,931.05.
Brent crude futures, the global oil benchmark, fell 0.22 per cent to USD 72.54 per barrel.
Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 778.75 crore, as per exchange data.
Other Asian and emerging market currencies were mixed this Monday, tracking the weakness of the greenback. The dollar index was flat but remains near the 2-week lows this Monday afternoon trade in Asia. PTI DRR MR —PTI

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