Karnataka Election 2018 result: Rupee strengthens after BJP turns largest party in assembly

The Indian rupee eased against US benchmark dollar index at interbank forex market on Wednesday trading session, after the Bharatiya Janata Party (BJP) won the Karnataka Elections. However, the party has failed to bag full majority and rival parties like Congress and JD(S) are looking form the government. However the Indian rupee has been trading near 68-mark against the dollar index. In early opening, the domestic unit rebounded by 27 paise to 67.80 per dollar fresh selling of the US currency by exporters and banks.

At around 1126 hours, Indian rupee was trading at 67.805 appreciating by 0.349 points or 0.51% against US dollar. 

Traders said the dollar's strength against other currencies overseas, as a surge in the benchmark 10-year Treasury yield above 3 per cent reignited a rally that had lost steam last week, capped the rupee's gains, reported in PTI. 

Anindya Banerjee analysts at Kotak Securities said, "Carry traders were upto their gills in Dollar short and Rupee long, and now that’s being unwound. This explains the sharp increase in USDINR value over the past 6 weeks. Going forward, unless US yields, US Dollar and most importantly, crude oil, backs off, 69 is in play over the short term."
According to Kotak Securities earlier, in case BJP forms the government, it will be a positive development for the Rupee, which is already one of the worst performing currencies in the EM basket in 2018. It will reduce some of the political risk premium. In that case, USDINR can trade all way down towards 66.60 levels on spot.

In previous trading sessiom, the domestic currency lost 56 paise -- the second biggest single-day fall of 2018 -- to end at a new 16-month low of 68.07 as panic dollar demand rattled the currency market.

Meanwhile, the benchmark BSE Sensex was trading at 35,400.81 below 143 points or 0.40%, however, in early opening the index was down 176.03 points, or 0.49% to 35,367.91. On the other hand, Nifty 50 was trading at 10,749.40 lower by 52.45 points or 0.49%.