Rupee pares early gains to settle marginally up at 70.83 amid spike in crude oil prices

The rupee pared most of its early gains and settled marginally up at 70.83 against the US currency on Thursday due to forex outflows amid growth concerns and uncertainty over the imposition of higher US tariffs on Chinese goods

Press Trust of India December 12, 2019 19:41:08 IST
Rupee pares early gains to settle marginally up at 70.83 amid spike in crude oil prices
  • At the interbank foreign exchange market, the rupee had opened higher at 70.67 against the US dollar and later touched a high of 70.56

  • However, growing concerns over the nearing deadline of 15 December for setting in of higher US tariffs on Chinese goods eroded the rupee gains

  • A spike in crude oil prices and fears of a further rise in retail inflation also capped the rupee gains

Mumbai: The rupee pared most of its early gains and settled marginally up at 70.83 against the US currency on Thursday due to forex outflows amid growth concerns and uncertainty over the imposition of higher US tariffs on Chinese goods.

A spike in crude oil prices and fears of a further rise in retail inflation also capped the rupee gains.

At the interbank foreign exchange market, the rupee had opened higher at 70.67 against the US dollar and later touched a high of 70.56 largely on the back of losses in the US dollar following the Federal Reserve's decision to keep interest rates unchanged.

However, growing concerns over the nearing deadline of 15 December for setting in of higher US tariffs on Chinese goods eroded the rupee gains.

Rupee pares early gains to settle marginally up at 7083 amid spike in crude oil prices

Representational image. Reuters.

The rupee finally settled higher by just 2 paise at 70.83 against the American currency, extending its gaining streak for the seventh in a row. The local unit had closed at 70.85 against the US dollar on Wednesday.

Forex traders said market participants traded cautiously ahead of the December 15 deadline, when additional tariffs on Chinese exports to the US are set to kick in.

"The Indian rupee along with other Asian currencies gained on Thursday following a weaker dollar," said V K Sharma, Head - PCG & Capital Market Strategy, HDFC securities.

The US Federal Reserve left interest rates unchanged and signalled it would stay on hold through 2020, keeping it on the sidelines in an election year.

However, volatility for the currency is expected to remain high ahead of the important events that are lined up in the next couple of sessions, Motilal Oswal Financial Services Forex & Bullion Analyst Gaurang Somaiyaa said.

Somaiyaa further said that market participants are waiting for cues on whether the US President will consider imposing import tariff on Chinese goods and that would trigger further move for the rupee.

"We expect the USDINR (Spot) to quote in a wide range of 70.70 and 71.40," Somaiyaa said.

According to HDFC securities' Sharma, the rupee is likely to show some weakness in coming days after gaining a percentage in the last seven sessions due to concerns over retail inflation and IIP data.

Official data released after market hours showed that retail inflation spiked to over three-year high of 5.54 percent in November, mainly on account of higher food prices.

Another set of data showed that industrial production shrank by 3.8 percent in October, mainly due to poor performance by power, mining and manufacturing sectors, signalling a slowdown in the economy.

Foreign institutional investors (FIIs) turned net sellers in the capital market, as they sold shares worth Rs 683.83 crore on net basis on Thursday, according to provisional exchange data.

Brent futures, the global oil benchmark, rose 0.80 percent to $64.23 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.06 percent to 97.18.

The 10-year government bond yield was at 6.78 percent on Thursday.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.8679 and for rupee/euro at 78.5816. The reference rate for rupee/British pound was fixed at 93.1011 and for rupee/100 Japanese yen at 65.17.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Rupee rises 12 paise to close at one-month high of 70.92 amid softening crude oil prices
Business

Rupee rises 12 paise to close at one-month high of 70.92 amid softening crude oil prices

The rupee rose by 12 paise to close at a more than one-month high of 70.92 against the US dollar on Tuesday amid softening crude oil prices and weakening of the greenback vis-a-vis major global currencies

Rupee advances 14 paise to close at 68.44 against dollar on US Fed rate cut signals
Business

Rupee advances 14 paise to close at 68.44 against dollar on US Fed rate cut signals

The rupee darted up 14 paise to finish at 68.44 against the US dollar on Thursday after dovish comments by US Federal Reserve chair Jerome Powell boosted emerging market currencies

Rupee snaps six-day rise, settles 10 paise down at 70.80 against dollar amid rising crude prices
Business

Rupee snaps six-day rise, settles 10 paise down at 70.80 against dollar amid rising crude prices

Snapping its six-day winning run, the rupee on Wednesday settled 10 paise lower at 70.80 against the US dollar amid rising crude prices and heavy foreign fund outflows