Mumbai: Indian rupee closed stronger past 71-mark while bond prices gained over 8 basis points on Thursday after continued fall in crude oil eased fears of higher current account deficit and inflation.

The currency closed stronger for seventh consecutive sessions, its longest winning streak since February 2017. The currency hit near three month high and gained over 3.1% in seven sessions.

The home currency ended at 70.69 a dollar — a level last seen on 29 August, up 1.08% from its Tuesday’s close of 71.46. The currency opened at 71.14 a dollar and touched a high of 70.69. Markets were closed on Wednesday due to bank holiday.

Bond prices hit near four month high. The 10-year government bond yield closed at 7.711% from its previous close of 7.793%. Bond yields and prices move in opposite directions.

On Wednesday, Brent Crude tumbled over 6% to the lowest since December 2017. Year to date, Crude oil is down 5.49%. They are currently down 26.8% from their 2018 peak of $ 86.29 per barrel seen on 3 Oct

According to Rajiv Ranjan Singh chief executive officer of Karvy Stock broking, a drop of $10 in crude oil price would improve the current account deficit (CAD) by 0.3-0.4%. He expect the currency to be range-bound in-between 71.5 to 73.7 in the near term.

The currency and bond market was also started reacting positively after the central bank and the government signalled a truce over contentious issues like reserves and liquidity.

“Overall, the outcome of the board meeting suggests that a direct confrontation has been avoided and the more contentious issues have been deferred to committees. The decisions suggest efforts have been made to preserve the RBI’s operational autonomy. The risk of high profile exits from the RBI has proven to be overblown, and this should provide a near-term respite", said Nomura Research in a 20 November note.

Continued open market operations and also, foreign investors have been net buyers in local equity and debt so far this November helped the local currency and bond prices. In November, they bought a combined of $1.5 billion in both equity and debt market, with rupee appreciating by 4.6% and bond yield fell nearly 14 basis points in this period.

Benchmark Sensex fell 0.62% or 218.78 points to 34,981.02 points. Year to date, it has rose 3%.

So far this year, the rupee has declined 10.4%, while foreign investors have sold $5.03 billion and $7.58 billion in the equity and debt markets, respectively.

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