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Business News/ Markets / Stock Markets/  Rupee stages a comeback on FPIs’ return, lower crude prices
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Rupee stages a comeback on FPIs’ return, lower crude prices

After nine months of outflows, foreign institutional investors turned net buyers of Indian stocks in July and August

The rupee has appreciated by 1.19% since 27 July, after weakening more than 7% this year.Premium
The rupee has appreciated by 1.19% since 27 July, after weakening more than 7% this year.

MUMBAI : The rupee strengthened to 78.49 against the dollar on Tuesday to reach its strongest level in a month, buoyed by lower crude prices and the return of foreign portfolio investors (FPIs) to the Indian markets. The currency, however, failed to hold on to the gains, falling 0.32% from the previous day’s 79.02 to close at 78.71 to the dollar. The rupee has appreciated by 1.19% since 27 July, after weakening more than 7% this year.

Oil dropped below the $100-mark on Monday amid weakening demand and a ramp-up in output by Libya, which further eased concerns about the widening current account deficit. Brent crude is currently trading at around $99.14 per barrel, its lowest since 14 July.

Separately, global sentiments have improved since the US Federal Open Market Committee (FOMC) meeting, where Fed chairman Jerome Powell sounded less hawkish and indicated a slower pace of tightening. The dollar index, which gauges the strength of the greenback against six peers, fell 0.4% to 104.9.

After nine months of outflows, foreign institutional investors (FIIs) turned net buyers of Indian stocks in July and August, with purchases of around 12,065 crore, contributing to gains in the currency.

“After FOMC, there has been a change in sentiments for the USD index, which is helping the rupee. Earlier, small negative global news would result in the weakening of the rupee, but today, the flashes referring to Taiwan region tensions didn’t have any negative impact on the rupee. Real flows have hit the market from FPIs, and exporters who had been on the sidelines hedged their receivables. The one-year premium has moved lower to 3.16%," said Paresh Nayar, president of CR Forex.

The focus is now on three key events scheduled for the week —the Opec+ meeting, the RBI monetary policy committee meeting, and the US jobs report—which may provide further cues for the domestic currency.

US House Speaker Nancy Pelosi’s arrival in Taipei on Tuesday is also likely to raise tensions with China.

The rupee may take cues from the weakening dollar and oscillate in the range of 78.10-79.25 in the next one month, said Ritesh Bhansali, vice-president, Mecklai Financial Services, advising exporters to wait for the levels of 79.25-plus levels to initiate hedges on their long-term exposures. “Importers can cover their payments on immediate payments and extend it to further initiate hedges on short-term payments to take advantage of the opportune rupee levels," he said.

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ABOUT THE AUTHOR
Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
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Published: 03 Aug 2022, 12:35 AM IST
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