Rupee Gains For The Third Straight Session, Tracking Capital Inflows

Tracking solid capital inflows, rupee gains for third consecutive session

The rupee rose against the dollar on Tuesday, rising for a third straight session mainly driven by strong capital inflows, even as domestic markets declined, tracking sharp gains in the past two sessions. The rise in oil prices weighed on investor sentiment.

Reuters quoted the rupee at 75.25 per dollar, and PTI reported that in the interbank forex market, the currency opened at 75.54 and touched an intra-day high of 75.27. It finally closed at 75.29, registering an increase of 24 paise over the previous close of 75.53.

The rupee on Monday gained 0.25 per cent to start the current financial year higher, supported by a strong rally in domestic stocks.

Solid foreign fund inflows and a weak dollar helped the rupee.

The rupee rose against the US dollar on Tuesday backed by foreign funds returning to domestic equities, Sriram Iyer, a senior research analyst at Reliance Securities, told PTI.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09 per cent lower at 98.90.

Dilip Parmar, Research Analyst, HDFC Securities said, “Consistent risk-on sentiment, weak dollar index and strong regional (Asian) currencies are supporting the local unit (Rupee) in the north direction.

Mr. Parmar said, “On the global front, investors are assessing the measures taken against the economic growth outlook of Russia and China as Shanghai is under lockdown. The near-term focus will be on RBI’s monetary policy decisions and stance. “

The currency comes after closing the 2021-22 fiscal year with a loss of around 4 per cent, tracking a general rise in crude oil prices from the Russia-Ukraine war.

Nevertheless, in recent sessions, a shift from foreign institutional investors in favor of India’s capital markets has helped the rupee’s appeal.

In fact, the latest stock exchange data shows that FIIs remained net buyers in the capital market on Tuesday as they bought shares worth Rs 374.89 crore.

On the day, the 30-share BSE Sensex slipped 435 points or 0.72 per cent to end at 60,177, while the broader NSE Nifty ended 96 points or 0.53 per cent lower at 17,957.

In the last two sessions, each of the domestic indices had gained about 3.5 per cent.

According to Sugandha Sachdeva, Vice President – Commodity and Currency Research, Religare Broking Limited, a PTI report shows that the rupee has gained about 0.90 percent this week.

Sachdeva said, “However, going forward, the rupee is unlikely to hold on to its recent gains as concerns about fresh sanctions against Russia by Western countries have led to a sharp fall in crude oil prices, which will affect the global supply scenario.” has decreased.” said.

The geopolitical crisis is dominated by sentiments and is likely to weigh on the domestic currency. He added that expectations of a rapid-fire rate hike by the US Fed to rein in decades of high inflation are also propelling the dollar index, a major headwind for the Indian rupee.

Markets are now focused on the minutes of the last US Fed meeting and RBI MPC results, both scheduled this week, for further signals about the monetary policy stance of the central banks concerned.

“We believe that the rupee may see fresh selling pressure in the coming days, wherein the 75.20 mark will act as a tight barrier for the rupee-dollar exchange rate,” Sachdeva said.

Asian and emerging market peers were firm and supported, while markets also edged out higher crude oil prices.

Anindya Banerjee, Vice President, Currency Derivatives & Interest Rate Derivatives, Kotak Securities, said, “Exporter selling and lumpy corporates were the key drivers of rupee appreciation. The rupee is witnessing some FPI inflows due to stabilization of oil prices.”

Mr. Banerjee further added that “we may see an increase in volatility during the second half of this week. We expect a range of 75.00 and 75.80 on the spot in the near term.”

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