Rupee opens 20 paise higher against US dollar as crude oil tumbles

The rupee on Monday opened 20 paise higher at 69.50 against the US dollar as crude oil prices slipped to multi-month lows on global recession fears. The domestic unit on Friday snapped its three-session losing streak to settle 17 paise higher at 69.70. 

On Friday, data showed India’s economy grew at a slowest pace in more than four years at 5.8 per cent in the last quarter thereby raising prospects of a rate cut in the RBI scheduled this week. For the fiscal year that ended March 31st showed the economy grew at 6.8 per cent compared to estimates of 7 per cent. 

Government spending, however, rose 13.1 per cent in the March quarter from 6.5 per cent ahead of the April-May elections, widening the fiscal deficit in the last financial year. 

"Market participants will be keeping an eye on the RBI policy statement and expectation is that the central bank could consider cutting rates. On the other hand, commentary of the RBI governor will be important to gauge a view for the rupee. Today, USD/INR pair is expected to quote in the range of 69.40 and 70.05," says Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL). 

In the equity market, overseas investors pumped in a net amount of Rs 9,031 crore into the Indian capital markets in May on expectations of more business-friendly measures following the BJP's landslide victory in the general elections.

Analysts at Nirmal Bang Securities say, "On daily chart, the USD/INR pair has marked an inverse hammer thus indicating possible weakness in the pair. If the pair opens below 69.85 levels, one can sell the pair for 69.65-69.50. However, if the pair breaches 70, it will test 70.25 on higher side."

On the global front, Asian share markets and oil prices slipped to multi-month lows on Monday on mounting worries growing Sino-US tensions and Washington’s new tariff threats against Mexico could tip the global economy into a recession, said a Reuters report. 

Brent crude futures tumbled 1.6 per cent to $61.01 per barrel, hitting lows last seen in late January, the report added.