Rupee Spurts 24 Paise To 71.50 Against US Dollar

The Indian rupee on Tuesday rose by 24 paise to settle at an over two-week high of 71.50 against the US dollar as persistent foreign fund inflows and hopes about US-China trade logjam breakthrough boosted forex market sentiment.

After starting off on a stronger note, the domestic unit further strengthened its position tracking a host of positive factors. It traded in the range of 71.49-71.68, before settling at 71.50 a dollar, clocking a gain of 24 paise—the biggest single-day rise since October 17.

The rupee gain was further strengthened by weakening of dollar against the key rival currencies. The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.01 per cent to 98.31.

Global benchmark Brent crude futures, however, rose 0.05 per cent to USD 63.68 per barrel. Globally, market sentiment improved after China’s Commerce Ministry says the lead envoys in trade talks between Beijing and the US spoke on the phone and agreed to continue to work toward a preliminary agreement for resolving their tariff war.

Analysts said that starting from September, FIIs have been net investors in Indian equities for three consecutive months. Cumulatively, they have pumped in more than Rs 36,000 crore in the last three months. On Monday, foreign investors bought equities worth Rs 960.90 crore, provisional data available with stocks exchanges showed.

“Broadly market is looking for a phase-one trade deal before the end of 2019. This optimism led to depreciation in USD/INR. Then, government’s news of proposing new industrial policy further weighed on spot, however, it couldn’t breach the crucial support of 71.50.

Therefore, in the coming days, we expect a small spurt in spot towards 71.75. For the week, we expect USD/INR to continue to trade in between 71.50-72,” Rahul Gupta, Head of Research-Currency, Emkay Global Financial Services, said.

On the equities front, the 30-share BSE Sensex settled 67.93 points, or 0.17 per cent, lower at 40,821.30.

The broader NSE Nifty gave up its life-time peak of 12,132.45 and finished 36.05 points, or 0.30 per cent, down at 12,037.70. Meanwhile, the 10-year government bond yield was at 6.48 per cent on Monday.