Rupee gains for third consecutive session as dollar continues to weaken

The rupee extended its gains against the US dollar for the third consecutive day, tracking the fall in the dollar index, said dealers. The local currency settled at 85.69 per dollar on Wednesday, against the previous close of 85.77 per dollar.

 

The rupee has depreciated by 0.08 per cent in the current calendar year so far.

 

The Reserve Bank of India (RBI) intervened in the foreign exchange market via dollar buys, which capped the rupee’s gain against the greenback, said dealers.

 

“The rupee gained further (on Wednesday) as the dollar index fell while the euro rose. Foreign portfolio investors (FPIs) seemed to be dollar sellers, buying equity since yesterday. RBI intervened in between and bought dollars at 85.50 to ensure that the rise in the rupee is not much after it closed at 85.77 yesterday,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.

 

 

“There seem to be good enough inflows taking care of any rupee depreciation, and for the moment it is unable to cross 86 levels,” Bhansali said.

 

The dollar index fell by 0.66 per cent to 99.55 on Wednesday. It measures the strength of the greenback against a basket of six major currencies.

 

“The rupee has quietly appreciated over 1 per cent in the past week, reflecting both external tailwinds from a softening dollar and internal stability from improving capital flows. However, with global trade war concerns still looming, volatility cannot be ruled out. Rupee range is expected between 85.25–86.25, with further cues likely from global trade developments and capital market trends,” said Jateen Trivedi, vice-president, research analyst – commodity and currency, LKP Securities.

 

Meanwhile, government bond yields fell further ahead of the Reserve Bank of India’s open market operation (OMO) auction on Thursday. The central bank plans to purchase Rs 40,000 crore worth of securities via auction.

 

The benchmark yield settled at 6.39 per cent, against the previous close of 6.41 per cent.