Rupee opens 11 paise higher at 69.15 against US dollar

The rupee on Tuesday opened 11 paise higher at 69.15 against the US dollar amid weak global cues and fall in crude oil prices. 

The domestic unit on Monday appreciated by another 44 paise to close at 69.26 in line with a strong rally in domestic equities amid hopes of a rate cut by the Reserve Bank of India (RBI). It was the second straight session of gain for the domestic currency, during which it has strengthened by 58 paise.

"Falling crude oil and slowing economic growth boosted speculations of monetary easing by the Reserve Bank of India (RBI) in its next bi-monthly policy. Market is already pricing 25 bps cut interest rate and surplus liquidity conditions after majority government at the Centre," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

News agency Bloomberg on June 3, quoting analysts, reported that the Indian rupee could be set to gain as Prime Minister Narendra Modi’s sweeping election victory boosts foreign inflows. However, that may present a dilemma for the RBI.

The rupee is emerging Asia’s top performer in the past three months, thanks to the gush of foreign cash. With inflows poised to accelerate after the election result, the Reserve Bank of India may have to rein in the currency or risk making the nation’s exports less competitive as rival currencies weaken, the report added. 

On Monday, foreign investors (FIIs/FPIs) infused a total of Rs 3,068.88 crore in the Indian capital market while domestic investors (DIIs) emerged as the net sellers to the tune of Rs 462.69 crore. 

On the global front, Asian shares fell on Tuesday, following a volatile Wall Street session as weak economic indicators and an intensifying Sino-US trade war inflamed concerns about global growth, supporting safe-haven assets such as bonds, Reuters reported. 

In the commodities market, Brent crude futures were at $61.06 at 7:30 am. That was 22 cents, or 0.4 per cent, below last session’s close.