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Rupee ends near day#39;s low at 72.62 per dollar

Rupee ends near day#39;s low at 72.62 per dollar
May 31
17:10 2021

Indian rupee erased the intraday gains and ended near the day’s low at 72.62 per dollar, amid buying seen in the domestic equity market.

It opened higher at 72.39 per dollar against Friday’s close of 72.43 and traded in the range of 72.34-72.65.

At close, the Sensex was up 514.56 points or 1% at 51937.44, and the Nifty was up 147.10 points or 0.95% at 15582.80.

“This week is going to be very eventful for USDINR, with RBI MPC outcome and the US NFP data. RBI MPC will continue to maintain its accommodative stance but the focus will be on the outlook of the central bank over the spill-over effect of the second wave of COVID-19 on the economic growth. So we can expect some volatility in spot ahead of that,” said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.

“Technically, there has been a sharp fall in USDINR spot and we expect the new trading range to be 72-73.” Gupta added.

The dollar held near a two-month high against the yen on Monday after a key measure of U.S. inflation showed stronger price gains than expected, keeping alive expectations of an eventual tapering in the Federal Reserve’s asset buying.

Gold prices rose on Monday and were headed for their biggest monthly jump since July 2020, boosted by a weaker U.S. dollar and lower bond yields, while growing inflationary pressure also lifted demand for the metal.

“The strength in the Indian rupee has been accentuated as the domestic equities have scaled to record highs, tracking international markets and improved sentiments back home due to a steady decline in COVID-19 cases. Furthermore, weakness in the greenback is acting as a tailwind for the rupee-dollar exchange rate,” said Sugandha Sachdeva, VP- Commodity & Currency Research, Religare Broking.

“Markets are now eyeing the gradual re-opening of the domestic economy, which is aiding the rally in local unit. However, with rising price pressures and strong economic data from the US, there is a lot of chatter around the tapering of massive bond purchases by the US Fed in its forthcoming meetings.”

“This may hurt risk appetite to some extent and lead to a rebound in the Dollar Index. That said, the 72.20 mark is capping gains in the Indian rupee and would remain a sacrosanct level to watch out for in the near-term,” she added.

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