Rupee surges 32 paise to 71.70 against US dollar in early trade

The rupee on Tuesday opened 32 paise higher at 71.70 against the US dollar. The domestic unit on Monday declined by 36 paise to close below the 72 level for the first time in nine months, hit by a 'flash crash' in global currencies due to uncertainty over the trade front.

The currency settled at 72.02 to the US dollar, the lowest closing level since November 14, 2018, even as equities spurted more than 700 points at close on stimulus measures.

Foreign investors remained net sellers in the equity market offloading stocks worth Rs 752.9 crore on a net basis on Monday.

On the macro front, the Reserve Bank of India (RBI) on Monday decided to transfer a record Rs 1,23,414 crore of its surplus to the central government for the fiscal year 2018-19 or FY19 (July to June), and an additional Rs 52,637 crore of excess provisions as recommended by the Bimal Jalan committee on Economic Capital Framework (ECF). 

The surplus transfer, commonly called “dividend”, is almost double the previous record of Rs 65,896 crore. In the previous year, the RBI transferred Rs 50,000 crore, while in 2016-17, the dividend was only Rs 30,659 crore because of demonetisation. READ MORE

"Today, USD/INR pair is expected to quote in the range of 71.40 and 72.05," said Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL). 

Globally, Asian stocks traded higher on Tuesday while safe-haven bonds sold off as signs Sino-US trade hostilities might be easing helped restore investor confidence after the previous session’s rout. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent after dropping 1.3 per cent the previous day. South Korea’s KOSPI added 0.8 per cent and Japan’s Nikkei rose 1 per cent, said a Reuters report. 

In the currency market, the dollar held gains made the previous day thanks to a rebound in US Treasury yields. In commodities, crude oil prices recovered some ground after significant losses the previous day on the prospect of crude from Iran, currently facing sanctions, hitting the market, the report added.