The rupee rose 11 paise from a record low against the dollar and finally recovered

The rupee hit a life-time intra-day low of 77.79 on Tuesday and closed 11 paise higher against the US currency due to a strong rally in the domestic stock market and dollar pullback.

After opening lower at 77.67, the local unit plunged further to its life-time intra-day 77.79 due to rising crude oil prices and disappointing macroeconomic data.

However, a strong rally in domestic equities helped the rupee return and close at 77.44, showing a net gain of 11 paise compared to the last close of 77.55. The Forex market was closed on Monday due to Buddha Purnima.

The dollar index, which measures the strength of the greenback against a basket of six currencies, fell 0.41 percent to 103.75. The US dollar fell nearly 1.5 percent from last week’s two-decade high.

Brent crude futures, the global oil benchmark, rose 0.74 percent to USD 115.09 a barrel.

Dilip Parmar, a research analyst at HDFC Securities, said the recovery of domestic equities with strong regional currencies helped the rupee recover for the third time in two weeks, after hitting a record low of 77.7950.

High inflation, depressed risk asset performance and foreign fund outflows weigh on local units.

“The dollar index is calming down after reaching a two-decade high. The greenback seems to be entering consolidation as treasuries are hovering around 3 percent and risky assets are witnessing bargaining,” Parmar added.

According to Parmer, the spot is expected to merge in the near term with resistance at USDINR 77.75 and support near 77.30.

“The Indian rupee has depreciated against the dollar on Tuesday due to high crude prices, rising inflation and weak risk appetite,” said Sriram Iyer, a senior research analyst at Reliance Securities.

Meanwhile, wholesale price-based inflation rose to a record high of 15.08 per cent in April, mainly on account of rising food, fuel and other commodity prices, which could prompt the Reserve Bank to raise interest rates in the forthcoming monetary policy review next month.

However, strong Asian and emerging market peers, dollar sales by state-run banks, probably in favor of the Reserve Bank of India and exporters controlling their exposure hedging losses, added Iyer.

In addition, local units have received some support from the growing domestic equity market. India’s BSE Sensex equity index rose 2.5 percent on Tuesday.

The US dollar weakened in Asian trade on Tuesday afternoon as investors cut bets ahead of a speech by US Fed Chair Jerome Powell.

Powell’s speech will be closely monitored to gauge any new insights into the direction of interest rates, Iyer said.

Praveen Singh, AVP-fundamental currency and commodities analyst, BNP Paribas’ shareholder, said the soft tone in the US dollar and the risk-on sentiment in the global market had slowed the fall.

The dollar weakened on the positive undertone of risky assets and weak economic data.

“However, the overall volatile risk perception and concerns about the global economic recovery could be sharply upward. Tensions over the Ukraine war could also weigh on the rupee,” Singh said, adding that the rupee could trade between 76.80-78.30. The next few sessions.

Jatin Trivedi, VP research analyst at LKP Securities, said the rupee could be seen moving positively as buyers are seen moving closer to the 77.75 level.

“The resistance for the rupee is at 77.15-77.20 which may be tested in the next session. If the WTI crude price starts moving above USD 115, the crude price may stop the rupee’s gains,” Trivedi said.

India’s exports of goods rose 30.7 per cent to USD 40.19 billion in April due to healthy performance in sectors such as petroleum products, electronics and chemicals, the trade deficit widened to. 20.11 billion this month, the Commerce Ministry said on Friday.

On the domestic equity market front, the BSE Sensex rose 1,344.63 points, or 2.54 per cent, to 54,318.47, while the broader NSE Nifty jumped 417.00 points, or 2.63 per cent, to 16,259.30.

According to the stock exchange, foreign institutional investors remained net sellers in the capital market on Monday as they offloaded shares worth Rs 2,192.44 crore.

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