Rupee Vs Dollar: After opening higher at 72.18 – its strongest level since September 21 – the rupee appreciated further by 67 paise against the US dollar in early trade on Wednesday, reported news agencies Press Trust of India (PTI) and Reuters. Rupee’s gains came amid a collapse in crude oil prices which dropped to one-year lows. Besides, the central bank’s announcement of buying Rs. 12,000 crore of government bonds also lifted the rupee. Easing of concerns on current account deficit and inflation also aided the rupee’s rate against the dollar.
Here are 10 things you should know about the rupee-dollar rate on Wednesday:
The rupee opened at 72.18 against the US dollar and appreciated further to quote 67 paise higher at 72 against the US dollar.
The rupee had gained 22 paise to close at 72.67 against the US dollar Tuesday.
Rupee sentiment was bolstered as oil markets struggled to find their footing after plunging 7 per cent in the previous session, with surging supply and the spectre of faltering demand keeping investors on the edge.
Brent crude, the international benchmark for oil prices, dropped almost 7 per cent to a one-year low of $65 a barrel after US President Donald Trump urged Organization of the Petroleum Exporting Countries (OPEC) and Saudi Arabia to maintain their current policy of gradually increasing output, which helps to cap oil prices. India imports more than 80 per cent of its crude oil requirements.
Rupee also got support from the Reserve Bank of India (RBI)’s announcement, on Tuesday, of liquidity injection. The RBI said that it would inject Rs. 12,000 crore into the market by purchasing government securities on November 15, 2018.
The surge in the rupee was also supported by dollar-selling by exporters and banks and the US unit’s weakness against some currencies overseas, traders were quoted as saying in the PTI report.
The rise in rupee, however, hit the IT stocks hard. At 10:11 am, the Nifty IT index – the barometer of tech stocks – traded 2.95 per cent lower as all of its 10 stocks tanked in trade.
The rupee has stabilised now after a slide of more than 14 per cent in the first 10 months of this year, which has made it the worst performing Asian currency in 2018, reported Reuters.
Meanwhile, in the bond markets, the 10-year benchmark bond yield fell to as much as 7.70 per cent, its lowest since August 2, reported Reuters. The paper had ended at 7.76 per cent on Tuesday.
On Monday, government data showed that retail inflation dropped to a 13-month low of 3.31 per cent in October. This was the third month in a row that inflation stayed below RBI’s medium-term target of 4 per cent. This has paved the way forRBI to allow easy lending policies. (With agencies inputs)