Rupee gains 37 paise to close at 80.91 against US dollar

Mumbai: The rupee appreciated by 37 paise to close at 80.91 against the US dollar on Tuesday, on encouraging inflation data and weak American currency.

Forex traders said a firm trend in domestic equities and easing crude oil prices also supported the local unit.

At the interbank foreign exchange market, the local unit opened at 81.18 and touched an intra-day high of 80.91 and a low of 81.45 against the greenback.

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The local unit finally settled at 80.91, registering a rise of 37 paise over its previous close.

On Monday, the rupee depreciated by 50 paise to close at 81.28 against the US currency.

“The Indian Rupee settled stronger against the dollar on Tuesday as large dollar outflows offset gains from a softer greenback and a stronger Chinese yuan,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

Asian markets got a boost from the offshore yuan which gained during the session shrugging off weak Chinese data.

Most regional currencies also traded higher amid improved risk sentiment and capped depreciation bias.

“Indian bond yields ended lower for a 7th straight session on Tuesday as easing inflation raised bets that the central bank will slow down its pace of policy tightening,” Iyer said.

In the overseas markets, the dollar index and the bond yields fell on Tuesday afternoon trade ahead of US producer prices data in the evening.

Apart from the data, investors will look to cues from speeches from several Fed members.

On the domestic macroeconomic front, indicating easing of the price situation, retail inflation moderated to 6.7 percent in October while the wholesale price index-based inflation fell to a 19-month low mainly on account of subdued rates of food items.

“Today focus will be on the German economic sentiment and weaker-than-expected data keep the crosses weighed down,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“We expect the USDINR (spot) to trade sideways and quote in the range of 80.80 and 81.60,” he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.38 percent to 106.25.

Global oil benchmark Brent crude futures fell 1.47 percent to USD 91.77 per barrel.

On the domestic equity market front, the 30-share BSE Sensex advanced 248.84 points or 0.40 percent to end at 61,872.99, while the broader NSE Nifty gained 74.25 points or 0.41 percent to 18,403.40.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 221.32 crore, according to exchange data.

According to the latest data released by the commerce ministry on Tuesday, India’s exports entered negative territory after a gap of about two years, declining sharply by 16.65 percent to USD 29.78 billion in October. Trade deficit widened to USD 26.91 billion.

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