Rupee gains 13 paise to end at nearly 1-week high against U.S. dollar

 

Bucking the weak trend in stocks, Indian rupee on Tuesday strengthened 13 paise to end at nearly one-week high of 61.67 against the greenback on persistent selling of dollars by banks and exporters on a day the RBI kept interest rates unchanged.

The rupee opened higher at 61.65 per dollar as against the yesterday’s closing level of 61.80 at the Interbank Foreign Exchange (Forex) market. It moved up further to 61.61 per dollar on initial selling of dollars by banks.

However, it fell to 61.84 per dollar in the afternoon on fresh demand from some banks before closing at 61.67 per dollar, showing a gain of 13 paise or 0.21 per cent from its last close.

The rupee has now gained by 19 paise, or 0.31 per cent, in two days and has closed at its strongest level since 61.41 on January 28, 2015.

The local currency moved in a range of 61.61 per dollar and 61.84 per dollar during the day.

“Foreign inflows and hopes of rates cuts in the future continued to support the local currency. Foreign investors were net buyers of $120.68 million in Indian markets yesterday and purchased a total $6.818 billion in 2015,” said Admisi Forex India, Director, Suresh Nair.

The Reserve Bank of India (RBI) earlier today left repo rate unchanged at 7.75 per cent, but cut SLR by 50 bps to 21.50 per cent from 22 per cent.

In international Forex markets, the widely-tracked dollar index was down by 0.05 per cent against a basket of major global rivals.

In the Tokyo market, the dollar was lower against the yen on Monday, with investors seeking to take profits on overnight gains in the greenback.

In the New York market, the Canadian dollar, Norwegian krone and Russian ruble rose against the U.S. dollar yesterday as oil prices fluctuated.

Meanwhile, the Indian equity benchmark Sensex dropped by 122.13 points, or 0.42 per cent, to close at nearly two-week low of 29,000.14.

“Some banks were selling dollars in the market which helped the rupee trade strong against the U.S. dollar. The trading range for the spot USD/INR pair is expected to be within 61.20 to 62.20,” said Veracity Group, CEO, Pramit Brahmbhatt.

Meanwhile, the forward premia recovered sharply on fresh paying pressure from corporates.

The benchmark six-month premium payable in July ended higher at 222.5-224.5 paise from 218-220 paise yesterday and forward contracts maturing in January 2016 also rose to 428- 430 paise from 417-419 paise.

The Reserve Bank of India fixed the reference rate for dollar at 61.7389 and for Euro at 69.9378.

The rupee eased against the pound to 92.89 per pound from 92.82 per pound previously while moved up against the euro to 69.99 per euro from 70.02.

However, the rupee ended steady against the yen to 52.51 per 100 yen.

Indians can invest up to $2,50,000 annually overseas

 

In mid-January, India’s foreign exchange reserves touched a new life-time high at $322.135 billion, driven by higher foreign fund inflows and lower Forex outgo on the back of a massive fall in global crude prices. File photo

Encouraged by foreign exchange reserves touching record levels, the Reserve Bank of India (RBI) on Tuesday doubled the annual overseas investment ceiling for individuals to $2,50,000. 

“On a review of the external sector outlook and as a further exercise in macro-prudential management, it has been decided to enhance the limit under the Liberalised Remittance Scheme (LRS) to $2,50,000 per person per year,” the RBI said in its Bi-Monthly Monetary Policy Statement. 

In view of the worsening current account deficit and a volatile rupee, the RBI had in August 2013 reduced the ceiling from $2,00,000 to $75,000 per person in a year under the LRS. Consequently, with improvement in Forex situation, it was raised to $1,25,000 in June 2014. 

The LRS allows residents to acquire and hold shares, debt instruments or other assets outside India without prior approval of the RBI. 

In mid-January, India’s foreign exchange reserves touched a new life-time high at $322.135 billion, driven by higher foreign fund inflows and lower Forex outgo on the back of a massive fall in global crude prices. 

Foreign funds had been pumping more and more dollars into Indian equities ever since the new government assumed charge in May. 

In 2014, FIIs pumped in $16.15 billion into Indian equities while they have exhausted the cap of $30 billion in Government securities. They have parked $32.5 billion in corporate bonds, which is 64 per cent of their cap of $51 billion. 

Foreign direct investments (FDI) in the country rose by 22 per cent to $18.88 billion during the eight months of the current fiscal. The amount was $15.45 billion in the April-November period of 2013-14. 

India’s current account deficit narrowed to 1.9 per cent of GDP in the first half of current fiscal from 3.1 per cent of GDP in the corresponding period of 2013-14.

Rupee rises 6 paise against dollar ahead of RBI policy

 

Ahead of RBI credit policy, the Indian rupee on Monday ended 6 paise higher at 61.80 against the American currency on fag-end selling pressure from banks and exporters due to a weak dollar in the overseas markets.

The rupee resumed lower at 62.00 per dollar as against last weekend’s level of 61.86 at the Interbank Foreign Exchange (Forex). It moved down further to 62.01 per dollar on initial dollar demand from banks.

However, it recovered immediately to end at 61.80 per dollar on selling of dollars by banks and exporters, showing a gain of six paise or 0.10 per cent.

Intra-day, it hovered in a range of 61.76 and 62.01.

The dollar index was down by 0.14 per cent against a basket of major global rivals.

“Rupee appreciated against the Dollar to start the week on a positive note supported by dollar sales and foreign inflows. Rupee’s gain came after speculation that RBI could cut rates to help boost economic growth fuelled expectations of foreign fund inflows,” said Admisi Forex India Pvt. Ltd., Director, Suresh Nair.

In the international market, the greenback met with selling pressure earlier in the morning, in line with the weak tone it has exhibited since Friday when weaker-than-expected U.S. GDP figures for December quarter helped moderate he currency market’s expectation for higher interest rates.

A downbeat reading for China’s official manufacturing purchasing managers index Sunday also prompted selling of the U.S. dollars.

Meanwhile, the benchmark BSE Sensex recovered from initial losses but ended lower by 60.68 points or 0.21 per cent at 29,122.27.

Veracity Group, CEO, Pramit Brahmbhatt said, “Investors traded cautiously ahead of RBI credit policy which will be announced tomorrow. After unexpected rate cut last month, RBI is expected to keep interest rates on hold tomorrow, although some of the market players are being optimistic and are expecting further rate cut.”

The trading range for the spot USD/INR pair is expected to be within 61.40 to 62.40, he added.

The forward premia declined further on sustained receipts by exporters.

The benchmark six-month premium payable in July ended lower at 218-220 paise from 222-224 paise on last Friday and forward contracts maturing in January 2016 also fell to 412- 419 paise from 421.5-423.5 paise.

The Reserve Bank of India fixed the reference rate for dollar at 61.8840 and for Euro at 69.9413.

The rupee firmed up further against the pound to 92.82 per pound from 93.33 previously and recovered against the euro to 70.02 per euro from 70.22.

The rupee also moved up to 52.51 per 100 yen from 52.59 previously.