The Indian rupee on Thursday recovered from a near 18-month low by gaining 12 paise to 68.30 against the dollar at the forex market on fresh selling of the US currency by exporters and banks. The minutes from the US Federal Reserve's meeting overnight appeared to have reassured investors that the central bank will not be too aggressive with raising interest rates, forex dealers told PTI. 

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Besides selling of the dollar by exporters and banks, weakness in the dollar against some other currencies overseas propped the rupee, they added.

Brokerage Nirmal Bang believes the recent depreciation of the rupee can be attributed to FPI outflows from Indian markets - both equity and debt - over the past two months. It expects the rupee to test 70 to the US dollar as the political heat rises. However, its sees little reason for a tailspin.  

"The Reserve Bank of India or RBI has sufficient fire power to provide support, although it has weakened compared to the past. We have increased our average USD-INR estimate for FY19 to 68.7 from 66 earlier, while our forecast for FY20 stands at 71.5," said Nirmal Bang in its currency outlook report. 

Meanwhile, Edelweiss Securities expects the rupee to breach its lifetime low against the US Dollar and head towards the 70 level. "This would partly readjust the dynamics and help in recovery thereafter," Edelweiss said in a  note.

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On Wednesday, the rupee had lost 38 paise to hit a near 18-month low of 68.42 against the US dollar following relentless capital outflows amid concerns over macro conditions and surging crude oil prices.