Rupee recovered by 10 paise to 66.38 against the US dollar (USD) on Tuesday, breaking its six-day fall. During Tuesday’s session, the rupee had strengthened to 66.29 against the US dollar, but gave up some of those gains to settle at 66.35.
While some selling of the dollar by exporters and banks boosted the rupee, a higher opening of stock markets also lifted the domestic currency, according to forex dealers.
On Monday, the rupee had lost 36 paise against the dollar to close at a 13-month low of 66.48 against the US dollar.
The rupee’s movement against the US dollar (INR vs USD):
1. In the past six sessions, the rupee had weakened from 65.20 to 66.48 against the US dollar.
2. The dollar has been gaining strength against a basket of currencies in the past few sessions. Sustained demand for the American currency from importers and dollar strength against other currencies overseas weighed on the rupee during this period, say forex dealers.
3. Headwinds in the form of widening trade deficit due to surging crude oil prices accompanied by portfolio outflows, amid unsupportive global factors, have weighed on the local currency in the last few trading sessions.
4. “We are expecting the Rupee /Dollar to range between 65.50 – 66.50 in the near term and be range-bound between 65.90- 66.50 this week,” said Salil Datar, CEO and executive director, Essel Finance VKC Forex.
5. Strength in the equity market on Tuesday, where the Sensex and Nifty registered their highest closing levels in more than two months, also supported the domestic currency. The BSE benchmark index Sensex ended 166 points higher at 34,616, while the Nifty settled 30 points higher at 10,614.>