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Rupee hits over 1-month high, erases 82 mark against dollar. What’s ahead
- The rupee which weakened by more than 10% against the dollar year-to-date, has gained by 1.2% just in the past 2 trading sessions.
- Currently, rupee is at one-month high levels.
The Indian rupee touched an over one-month-high on Monday despite negative news out of China. The performance in local currency was lifted due to resilience in Asian shares including domestic equities coupled with improved risk sentiment in the sterling which weighed on the US dollar. In the past two sessions alone, the rupee has gained by at least 1.2% against dollar. Except for the Chinese yuan, Asian currencies extended their second consecutive day gains. At home, Indian markets extended their rally with the Sensex breaching over 61,100 mark and Nifty 50 crossing 18,200 level. The rupee has currently erased 82-mark!
At the interbank forex market, the Indian rupee climbed 0.63% to a session high of 81.92 per dollar --- which is the highest since October 3. On the other hand, the dollar index tripped 0.3% to 110.40 as Sterling Pound gained momentum against it. Last week, on Friday, rupee was around 82.44 against the dollar.
The rupee which weakened by more than 10% against the dollar year-to-date, has gained by 1.2% just in the past 2 trading sessions.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, "The Indian Rupee appreciated on Monday lifted by strength in the Asian stocks and currencies despite negative news out of China. The Rupee strengthened by 0.63% to settle at the day’s high of 81.92 per dollar, its strongest since October 3."
Iyer added, "Excepting the Chinese yuan, Asian currencies extended their gains into a second day amid improved risk appetite in the region as market shrugged off the Yuan's weakness."
Further, he said, "Markets also shrugged off stronger Brent crude prices which traded near $100/barrel and a further uptick in oil cannot be ruled out which could worsen the trade deficit. The Indian benchmark 10-year bond yield ended lower at 7.434% on Monday, after closing at 7.469% on Friday."
Sensex closed at 61,185.15 up by 234.79 points or 0.39%, while Nifty 50 ended at 18,202.80 higher by 85.65 points or 0.47%. Midcap and smallcap stocks outperformed in the broader market. Major buying was seen in auto, banking, metal, oil & gas, and capital goods stocks.
Indian markets will be closed on Tuesday for a local holiday.
In terms of overseas markets, Iyer said, "the dollar eased even as short-term Treasury yields hovered near their highest since 2007 after last week's Fed rate hike, a relatively robust jobs report and ahead of important inflation data this week. The Euro and the Sterling strengthened against the dollar, while in Asia the Japanese Yen weakened against the dollar this Monday’s trade."
In its weekly (November 7 to November 11) outlook report for Indian currency, ICICI Direct expects rupee to likely depreciate back to 83.00 levels. It said, "The dollar is gaining strength as comments from Fed chair Jerome Powell dashed hopes that interest rate hikes will end soon."
Additionally, the stock brokerage's note stated that the US CPI data is likely to show that inflation remained elevated and a US jobs report is likely to show that fewer people have filed for jobless claims. Also, investors will remain cautious ahead of US midterm elections as control of Congress is at stake. Moreover, CPI data from India is anticipated to show that inflation remained above 6% for a tenth consecutive month and stayed above RBI’s comfort zone.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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First Published:7 Nov 2022, 05:35 PM IST
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