BackRupee closes stronger against dollar at 61.09 as market rally continues
The rupee hit 60.95 per dollar in early trade after opening higher at 61.02 against its Thursday's close of 61.12
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Mumbai: The Indian rupee strengthened against the US dollar on Friday, continuing its rally in the past four sessions, buoyed by improvement in the deficit numbers and strength in the local equity markets.
The partially convertible Indian rupee traded in the 60-levels towards noon, before paring some of its gains. The rupee ended at 61.09 per dollar, up 0.05% from previous close. The rupee hit 60.95 per dollar in early trade after opening higher at 61.02 against its Thursday’s close of 61.12. It touched a low of 61.17.
The S&P BSE Sensex and the Nifty hit fresh highs on Friday. The Sensex crossed 21,960 points, while the Nifty surged past 6,500 points for the first time. The Sensex gained as much as 2.08%, or 447.02 points, to 21,960.89 points in Friday trade, while the National Stock Exchange’s broader 50-share Nifty rose 2.13%, or 136.65 points, to 6,537.8 points.
In the past four days, the rupee has gained 1.56% against the dollar. Since the beginning of this year, the domestic currency has gained 1.17%, while foreign institutional investors (FIIs) have bought $807.8 million during the period from local equity markets.
Sentiment in the currency market has been positive due to improvement in current account deficit (CAD) numbers. India’s CAD narrowed to $4.2 billion in the October-December quarter compared with $5.2 billion in the previous quarter, the Reserve Bank of India (RBI) said in a statement in Mumbai on Wednesday. The shortfall was equivalent to 0.9% of gross domestic product (GDP).
The rally was seen in the Asian currency markets, too, with majority of the currencies trading up.
The Indonesian rupiah climbed 0.37%, Philippines peso rose 0.33%, South Korean won rose 0.31%, Japanese yen rose 0.13%, Malaysian ringgit rose 0.12% and Taiwan dollar rose 0.09%.
The yield on India’s 10-year benchmark bond ended at 8.813%, compared with its Thursday’s close of 8.793%. Bond yields and prices move in opposite directions.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 79.505, down 0.2% from the previous close of 79.663.
Besides the local factors, easing concerns of Russia’s incursion into Ukraine will spark a broader conflict, to helped, dealers said. Local importers’ purchases of the dollar will limit the rupee’s gains, according to Amogh Moghe, a foreign-exchange trader at Mecklai and Mecklai Ltd in Mumbai.
“The narrowing current account deficit and improved risk sentiment as the Ukraine crisis is seen easing are supporting the rupee," Moghe said. He predicted the currency will stay in a 60.85-61.15 range versus the dollar on Friday.
Bloomberg contributed to this story.
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