Indian Rupee strengthens against US dollar, trades below 68-mark; here’s why

The Indian rupee on Tuesday strengthened against US benchmark dollar index at interbank forex market. In early opening, the domestic unit recovered from its 16-month low to trade 15 paise higher at 67.97 against the US dollar, after opening 10 paise higher, on fresh selling of the dollar by exporters and banks. The rupee was trading over 68-mark in previous trading session which was last seen in January 2017, however, one needs to note that, the current level of rupee is still over 15-month low. 

At around 1137 hours, the Indian rupee was trading at 67,955 above 0.160 points or 0.23% against US dollar. 

Anindya Banerjee analysts at Kotak Securities said, “Intermarket scenario is more favorable towards Rupee than USD today morning. US stock markets have closed in the green and we are seeing a risk on trade prevail in Asian financial markets. Asian currencies are gaining against USD. Even the US 10 year yields are off their highs. However, Brent is inching towards 80 handle. Weight of the evidence suggests that Rupee has more tailwind than headwind today during the Asian session.” 

Banerjee added, “ If the template holds up, we can see the expected technical correction in the USDINR. It needs to be mentioned, the intermediate trend in USDINR remains upward as long as prices do not close on a weekly basis below 67.30 levels on spot, the 2SD upper band of Bollinger on a weekly basis.” 

In previous trading session, the rupee finished at 68.430 down by 0.65% against US dollar. For which Kotak said, “Yesterday, Dollar Rupee though managed to print a new 52 week high at 68.16 levels on spot. However, it failed to make much progress during the day, as exporter selling and alleged central bank intervention capped the advance.” 

Such was second time in last few days that prices have stalled around 68.15 levels. 

Also, foreign portfolio investors continued to remove money from Indian market, as on Monday, outflow of Rs 1,958.05 crore was recorded cumulatively in equity, debt and hybrid market, as per NDSL data. 

Moreover on Tuesday, the benchmark Sensex index was trading at 34,614.55 muted compared to previous trading session, however, in early  trade the index was 43.50 points, or 0.12% higher at 34,659.63. On the other hand, Nifty 50 surged by 3.90 points or 0.04% trading at 10,520.60.