Rupee rises for second straight day; surges 10 paise at 70.34 driven by easing crude prices

Mumbai: The rupee on Wednesday appreciated by 10 paise to close at 70.34 against the US dollar, marking the second straight session of gain driven by easing crude prices, while the Reserve Bank’s plan to conduct open market operation also buoyed investor sentiment. The rupee opened strong at 70.32 and later rose to the day’s high of 70.17 at the interbank forex market. During the day the local unit touched an intra-day low of 70.39 against the US dollar. The domestic currency finally settled at 70.34, higher by 10 paise from the previous close. The rupee on Tuesday had recovered 7 paise to close at 70.44 to the US dollar. [caption id=“attachment_5114261” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Forex traders said the rupee strengthened after the RBI announced a plan to conduct the open market operation. On the other hand, heavy selling in domestic equities and foreign fund outflows restricted its gains. “Bond yields fell for the third session after Reserve Bank of India (RBI) announced plans to conduct more open-market operations,” said V K Sharma, head PCG & capital markets strategy, HDFC Securities. “Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct purchase of … Government securities under Open Market Operations for an aggregate amount of Rs 12,500 crore on 16 May, 2019, through multi-security auction using the multiple price method,” the RBI said in a release. Meanwhile, the Dollar Index which gauges the greenback’s strength against a basket of six currencies, rose 0.04 percent to 97.56. “The dollar is trading higher supported by comments from senior Federal Reserve officials playing down the likelihood of interest rate cuts, and by a fresh bout of safe-haven buying on geopolitical tensions,” Sharma said. Foreign institutional investors (FIIs) net sold equities worth Rs 1,142.44 crore on Wednesday, provisional data available with stock exchanges showed. Domestic benchmark indices ended lower after a volatile session on Wednesday as investors took money off the table amid mixed global cues. The 30-share BSE benchmark closed 203.65 points, or 0.55 percent, lower at 37,114.88, while the broader NSE Nifty shed 65.05 points, or 0.58 percent, to settle at 11,157. On the global front, forex dealers said, investor sentiments improved after US President Donald Trump on Tuesday hoped that the world’s top two economies would be able to reach an agreement. Meanwhile, Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.4208 and for rupee/euro at 79.1511. The reference rate for rupee/British pound was fixed at 91.2137 and for rupee/100 Japanese yen at 64.25.