Rupee gains 19 paise on hopes of forex inflow as economic activities resume

Mumbai, May 21 (PTI) The rupee rose by 19 paise to close at 75.61 against the US currency on Thursday on dollar selling by banks following gains in equities and weakness in the greenback.

Gradual reopening of the economic activities including air and rail travel bolstered the rupee sentiment, forex dealers said.

The rupee, however, witnessed high volatility during the trading session as positive domestic equities supported the local unit, while foreign fund outflows and concerns over coronavirus outbreak weighed on the greenback, they added.

At the interbank foreign exchange, the rupee opened strong at 75.70 gained further to finally settled at 75.61, registering a rise of 19 paise over its previous close.

On Wednesday, the rupee had settled at 75.80 against the US dollar. During the session, the local unit witnessed an intra-day high of 75.61 and a low of 75.82.

The 30-share BSE Sensex rose for the third day in a row to settled 114.29 points or 0.37 per cent up at 30,932.90. The broader NSE Nifty advanced 39.70 points, or 0.44 per cent, to 9,106.25 as investors took heart from the gradual resumption of economic activities.

'Indian rupee appreciated on expectation of dollar inflows. So far this month, FIIs have bought USD 1.09 billion worth equities. Strength in domestic equities and easy liquidity conditions supported the rupee,' said Devarsh Vakil, Head Advisory, HDFC securities.

Vakil further said that forex markets will keep an eye on Chinese Yuan for near term cues as China's National People's Congress will meet and decide on stimulus to support the economy.

According to Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, the rupee appreciated 'as some overseas inflows into local stocks were witnessed amid a weak greenback, foreign banks were selling dollars as FII inflows into local equities led gains in rupee'.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 1.16 per cent up at 99.28.

Brent crude futures, the global oil benchmark, rose 1.71 per cent to USD 36.36 per barrel.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.6712 and for rupee/euro at 82.8060. The reference rate for rupee/British pound was fixed at 92.6432 and for rupee/100 Japanese yen at 70.21. PTI DRR MR MR