The Indian rupee (INR) today rose to an intraday high of 69.50 per US dollar (USD), wiping out all its losses for the year, buoyed by strong foreign inflows into domestic equity markets. Opening at 69.75 against the US dollar, the rupee traded in the range of 69.50-69.76 against the US dollar, according to Bloomberg data. The rupee settled at more than two-month high of 69.71, up 18 paise, as compared to Monday's close of 69.89.
5 things to know about the rupee-dollar trade today
1) Indian stock markets today extended gains from their highest close in nearly six months as some opinion polls give an edge to the ruling NDA in Lok Sabha elections, scheduled between April 11 and May 19, with results to be announced on May 23. The Sensex today rose over 450 points while the Nifty crossed the 11,300 levels. The Indian markets had underperformed global markets in January and February.
2) Foreign portfolio investors have so far this month poured in a net $1 billion into Indian equities, lifting benchmark index the Sensex by 5%. Year to date, foreign institutional investors have bought Indian equities worth $3 billion. “The repricing of political uncertainty could continue to cause Indian assets to outperform," said forex advisory firm IFA Global in a note.
3) Also buoying the rupee, most exporters typically bring back their dollars to India towards the end of the fiscal year to settle their annual accounts and repayment of debts which increases inflows, say forex dealers.
4) However, the March rally in rupee risks fizzling after the end of the fiscal year, say analysts. According to Reuters data, since 2016 three out of four times, barring 2018, the rupee has moved within a 3% range in the month of March.
5) Traders will also watch domestic February retail inflation and January factory output data due later today. Benign inflation data has raised the possibility of a back-to-back rate cuts by the RBI next month. US inflation data is also due today.