Rupee gains 15 paise at 74.40 versus dollar in early trade
Indian rupee opened 15 paise higher at 74.40 per dollar on Thursday against previous close of 74.55, amid buying seen in the domestic equity market.
On April 7, the rupee ended at day’s low at 74.55 per dollar against previous close of 73.42.
At 10:07 IST, the Sensex was up 378.17 points or 0.76% at 50039.93, and the Nifty was up 116.30 points or 0.78% at 14935.30.
“The Indian rupee has went on to witness steep depreciation towards five-month lows as rising Covid-19 cases in the country have created an atmosphere of lingering uncertainty, posing risks to an already fragile state of recovery. Besides, the RBI in its monetary policy review has maintained status-quo on policy rates for the fifth consecutive meeting, amid the pressures arising from the second wave of the virus which are likely to crimp demand and hurt the domestic currency,” said Sugandha Sachdeva, Vice president – Commodity and Currency Research at Religare Broking.
“Facing hurdle at 72.20 mark, the domestic currency has reversed course in a rather steep manner and looks poised to witness further depreciation in coming days, even as sustained portfolio inflows are still underpinning the local unit, ” she added.
“Going forward, the domestic currency has near term support pegged at 74.50, while it is expected to trickle down further on the downwards trajectory in case of any breach of the same,” Sachdeva said.
The U.S. dollar traded near more than two-week troughs versus major peers on Thursday, tracking Treasury yields lower, after minutes of the Federal Reserve’s March policy meeting offered no new catalysts to dictate market direction.
“The RBI policy was very interesting and it felt like a quantitative easing programme. The key take away is that the RBI will continue to maintain the ultra-loose monetary policy and infuse liquidity for a long time as Covid surge will keep imparting uncertainty to growth outlook,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
“The RBI has reiterated that growth is the priority. Also, CPI Q4 FY22 projection has been reduced to 5% from 5.2% earlier which means inflation will be moderated in the future, and this statement rules out any monetary tightening speculations.”
“The forex market wasn’t expecting such a dovish stance and rupee got set on fire. The resistance in USDINR spot have become support as RBI intervention was missing. The post policy knee jerk reaction will simmer and the USDINR spot will trade in between 73.50-74.50,” said Gupta.