The Indian rupee on Tuesday inched up by a paisa against the American currency to end at 62.26, extending its winning streak to seventh straight session — the longest string of gains since June 2011.
The rupee opened higher at 62.20 per dollar as against Monday’s closing level of 62.27 per dollar at the Interbank Foreign Exchange (Forex) Market. It then firmed up further to 62.14 per dollar on initial selling of dollars by banks and exporters in view of sustained capital inflows.
Expectations that the U.S. Federal Reserve will not tighten its monetary policy until the second half of the year has helped emerging market currencies like rupee to gain.
However, the rupee trimmed its initial gains on some dollar demand from banks and importers and ended at 62.26, showing a marginal gain of one paise or 0.02 per cent. The rupee has now gained 71 paise or 1.13 per cent against the U.S. dollar in seven straight trading sessions.
In the Asian market, the euro fell against the dollar and the yen, with some traders adjusting positions after the currency staged a rally overnight. The dollar index, a gauge of six major global rivals, was down by 0.19 per cent on Tuesday.
In New York Market Monday, the dollar traded lower against its rivals after recording its largest weekly percentage decline against the euro since October 2011.
Oil prices declined in the Asian trade on Tuesday after activity in China’s factory sector fell to an 11-month low, stoking worries over the strength of the world’s No.2 economy.
Meanwhile, the Indian stock benchmark Sensex ended lower by 30.30 points, or 0.11 per cent, to 28,161.72.
“Technically, the pair has remained below an important level of 62.40. So only a break above the level could push the pair higher. On the other hand, we believe that importers may have to come into the markets to cover for their month-end and year-end positions around 62.10 levels,” said Suresh Nair, director, Admisi Forex India Pvt. Ltd.
Globally, the dollar index remained weak as markets will be turning their attention to Tuesday’s U.S. inflation report after Fed Chair Janet Yellen warned last week that the stronger dollar was pushing down inflation. The euro continued its upward momentum against the dollar on Tuesday, he added.
The forward premia firmed up further on sustained paying pressure from corporates. The benchmark six-month premium payable in August firmed up to 223-1/2-225-1/2 paise from Monday’s closing level of 217-219 paise and forward contracts maturing in February 2016 also moved up further to 457-459 paise from 445-447 paise.
The Reserve Bank of India fixed the reference rate for dollar at 62.1988 and for euro at 68.0330.
The rupee recovered against the pound to 92.79 as against 92.88 previously while continued to decline against the euro to 68.33 per euro from 67.82 previously. The domestic currency also dropped further against the yen to 52.14 per 100 Japanese yen from 51.98 previously.
