The rupee recovered from its all-time low of ₹80.06 to close 20 paise higher at ₹79.85 against the US dollar on Thursday following overall weakness in crude oil prices and fresh foreign fund inflows.
A recovery in domestic equities and weakness of the greenback overseas further helped the domestic currency, forex traders said.
At the interbank forex market, the local unit opened lower at ₹80.03 against the greenback and fell further to an intra-day low of 80.06. The local unit recouped losses later and settled at ₹79.85, registering a rise of 20 paise over its previous close.
On Wednesday, the rupee for the first time settled below the ₹80-level against the US currency due to strong dollar demand from importers and fiscal slippage concerns.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was down 0.04 per cent at 107.03.
Brent crude futures, the global oil benchmark, fell 4.46% to $102.15 per barrel.
“After the last four days’ underperformance, Indian Rupee becomes the second best-performing currency among Asian currencies on probable dollar selling by state banks on behalf of central banks and mild foreign fund inflows.
“All eyes will be on the European Central Bank (ECB) meeting, which will impact the dollar index. With the Euro holding the major weight in the dollar index, any unexpected outcome from the meeting will be dollar positive and in turn, weigh on other currencies,” said Dilip Parmar, Research Analyst, HDFC Securities.
On the domestic equity market front, the BSE Sensex ended 284.42 points or 0.51% higher at 55,681.95, while the broader NSE Nifty advanced 84.40 points or 0.51% to 16,605.25.
Foreign institutional investors remained net buyers in the capital market on Thursday as they purchased shares worth ₹1,799.32 crore, as per exchange data.
“Rupee traded with minor gains as dollar index held ground but majorly Crude sell-off was witnessed with Nymex closer towards $95 and Brent near $102 down 4% each helping rupee gain minor ground,” said Jateen Trivedi, VP Research Analyst at LKP Securities.
Trivedi further said going ahead rupee can be seen in the range of ₹79.75-80.20 any breach will fuel further momentum.
According to a report, the rupee, which has plumbed the ₹80-level against the US dollar, is unlikely to get any tailwind this fiscal and may fall further in the medium term due to higher crude prices and imports.
In the report on Thursday, Swiss brokerage UBS Securities said the rupee, which has lost 7.5% so far this year against the US dollar, will settle at the 80 levels by March.
