Rupee recovers from record low of 69.13 as dollar rally eases, jumps 21 paise to end at 68.84

The sell-off in the rupee accelerated in early trade, with the local unit plunging to a new historic low of 69.13 before recouping losses.

Press Trust of India July 20, 2018 19:39:54 IST
Rupee recovers from record low of 69.13 as dollar rally eases, jumps 21 paise to end at 68.84

Mumbai: The rupee on Friday staged an impressive rebound from lifetime low levels, surging by 21 paise to end at 68.84 against the US dollar on suspected the central bank's intervention to check volatility in currency markets.

The sell-off in the rupee accelerated in early trade, with the local unit plunging to a new historic low of 69.13 before recouping losses.

Suspected intervention by the Reserve Bank of India (RBI) through state-run banks and short-selling the dollar by some foreign banks predominantly triggered the recovery momentum.

The greenback took a reverse turn and slipped below one-year high after President Donald Trump criticised the Federal Reserve's interest-rate increases and expressed concerns about strengthening the currency, adding that it would put the US at a disadvantage to other economies.

The dollar index, which shows greenback's strength against a basket of currencies, fell by 0.66 percent to 94.53 on Friday.

The US dollar has gained more than 5 percent in the past three months on expectations the US central bank will keep raising interest rates in the coming months. The US Fed has raised interest rates five times since Trump took office in January 2017.

Rupee recovers from record low of 6913 as dollar rally eases jumps 21 paise to end at 6884

Representational image. News18.

Forex sentiment turned highly volatile initially tracking the Chinese yuan's fall to its weakest in more than a year, as a trade dispute between the world's two largest economies intensified.

Deteriorating domestic macro scenario coupled with global uncertainty shocks could continue to keep the rupee under severe pressure in near term, a forex dealer commented.

Most Asian currencies were trading flat to higher against the dollar.

In the meantime, crude prices were little changed and set for a sharp weekly drop on concerns over oversupply and the ongoing trade conflict between the US and China.

The benchmark Brent was trading at $72.55 a barrel in early Asian trade.

At the Interbank Foreign Exchange (forex) market, the rupee opened marginally higher at 69.01 from an overnight record low of 69.05.

But soon tilted to the downside with momentum swinging into the red and collapsed to a lifetime low of 69.13 on the back of heavy dollar pressure.

However, the local unit made a strong comeback in mid-morning deals after RBI stepped in by selling dollars to support the rupee.

After regaining session high of 68.82, it finally settled down at 68.84, revealing a steep rise of 0.21 paise, or 0.30 percent.

For the week, the Indian unit retreated after a brief rebound and depreciated by 31 paise against the US dollar.

The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 68.8458 and for the euro at 80.3114.

The 10-year benchmark yield, in contrast, held steady at 7.79 percent.

Against a basket of other currencies, the dollar index is sharply down at 94.40.

In the cross-currency trade, the rupee lost further ground against the pound sterling to end at 89.80 per pound from 89.69 and drifted further against the euro to finish at 80.25 as compared to 80.05 yesterday. It also weakened against the Japanese yen to close at 61.26 per 100 yens from 61.12.

In forward market on Friday, the premium for dollar declined due to mild receiving from exporters.

The benchmark six-month forward premium payable in November edged down to 103.25-105.25 paise from 105-107 paise and the far-forward May 2019 contract moved down to 252-254 paise from 255-257 paise earlier.

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