The rupee edged higher by four paise against the US dollar on Friday, September 3, to settle at 73.02 (provisional) amid a strong rally with a record-setting spree in domestic equities. At the interbank foreign exchange market, the domestic unit opened at 73.05 against the dollar and registered an intra-day high of 73.01. It witnessed a low of 73.15. In an early trade session, the domestic unit inched higher by two paise to 73.04 against the greenback. The rupee closed at 73.02 against the dollar, registering a gain of four paise against its previous close.
On Thursday, September 2, the local unit settled at 73.06 against the American currency. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, gained 0.01 per cent to 92.23. On the back of stronger inflows and bullish equities, the domestic currency marked its second weekly gain as it strengthened 67 paise against the dollar on a weekly basis.
What analysts say:
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities:
- What a change in weather in USDINR. After being ranged for over two months, between 74.10 and 75.00, USDINR was slammed lower, towards 73.00 levels this week, on the back of weak $ Index and rising equity markets. After a bland speech from US Fed chairman, Mr. Powel in Jackson Hole, where he dragged his feet on raising interest rates or announcing taper, USDINR came under selling pressure. This trend may not reverse soon, as traders shy away from USD and own emerging market currencies like the Indian Rupee.
- Next week is going to be data light and hence the downward bias will continue in USDINR, barring any unexpected sell-off in stocks. However, with USDINR back near 73.00, the tussle between market and RBI is fully underway. Market wants to know where will RBI draw the line and intervene aggressively? We would continue to look for selling opportunities as upside may remain capped under 73.50 levels on Sept futures.
Mr Amit Pabari, MD, CR Forex:
”The difference between the last two trading sessions of August month and the first two trading sessions of the current month is the central bank’s intervention. It seems that RBI has absorbed & supported the 72.90 levels and will not tolerate any further gains beyond the same levels. On the data front, rising India’s trade deficit and weakness in manufacturing PMI despite lower cases in India doesn’t support the rupee’s rally and odds of depreciation increases from the current level.
Globally, US’s trade deficit narrowed down in July, weekly jobless claim fell to mid-Mar,2020 level and lay-off tumbled to a 24-year low. These clues support the strong US DXY case. Moving ahead, all eyes will be on today’s US job report, which will clear the dust from the Fed’s tapering timeline surface. Overall, we are expecting that the USDINR pair should find support near 72.80-90 levels and rebound towards 73.50 initially and then towards 73.80-74.00 levels.”
Domestic Equity Markets Today:
On the domestic equity market front, the BSE Sensex ended 277.41 points or 0.48 per cent higher at a lifetime high of 58,129.95, while the broader NSE Nifty climbed 89.45 points or 0.52 per cent to close at a record 17,323.60, tracking gains in Reliance Industries.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:
”Rally in the India equity market this week was healthy and broad-based. Benchmark indices – Sensex 30 and Nifty 50 gained 3.4-3.5 per cent and recorded new all-time highs during the week. Post underperformance in August 2021, BSE Midcap and BSE Smallcap index outperformed the Sensex and Nifty with returns of 4.7 per cent and 3.8 per cent respectively during the week. Overall rally in the market was broad-based with almost all key sectoral indices posting positive returns.
The U.S. 10 year treasury yield and oil prices remained stable this week. Central Bank policy measures, inflation, commodity prices, and covid-19 will be some of the key data points/events to look out for in the near to medium term.
FPIs have been net buyers in Indian equities in the initial days of Sep 2021. Going ahead, the global investment continues to stay challenging. The market is focusing on the sustenance of growth in developed economies. As a result, global investors are looking on emerging markets to diversify risks and India cannot be ignored by global investors considering growth opportunities.”
According to exchange data, the foreign institutional investors were net buyers in the capital market on September 2 as they purchased shares worth Rs 348.52 crore. Brent crude futures, the global oil benchmark, rose 0.53 per cent to $73.82 per barrel.