Rupee rises by 7 paise to end at nearly 1-year high on positive macro data

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Mumbai, Feb 15 (PTI) The rupee on Monday rose by 7 paise to settle at nearly one-year high of 72.68 against the US dollar supported by positive macroeconomic data, weak dollar and a rally in domestic equities.

Improvement in risk sentiment following expectations of a US stimulus package, foreign fund inflows and gains in Asian currencies boosted the local currency, analysts said.

The local currency opened higher at 72.61 and rose to a day's high of 72.57 following a rally in stock markets.

However, suspected RBI intervention capped its rise and the rupee finally closed at 72.68, showing gains of 7 paise over the previous close. This is the highest closing level since February 28, 2020, when the rupee had settled at 72.24.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.15 per cent to 90.34.

Devarsh Vakil, Deputy Head of Retail Research, said that risk sentiments, foreign fund inflows and better-than-expected economic data fuelled rally in the rupee.

'Indian rupee started another week on front foot by gaining 7 paise. Among the Asian currencies, Chinese yuan traded to a new high post June 2018 high and the rupee traded at the strongest level since March 2020,' Vakil said.

On the domestic macroeconomic front, indicating some signs of recovery, industrial production recorded a positive growth of 1 per cent in December while retail inflation cooled to a 16-month low of 4.06 per cent in January.

'The appreciation in the rupee is primarily due to positive comments by rating agency Moody's on India's economic outlook, record fund flows in Indian equities by FIIs,' said Nish Bhatt, Founder & CEO, Millwood Kane International.

Bhatt further said that the rally in crude prices, a hope of an extra stimulus package from the US government, and the policy stance of the US Fed to keep rates low for a longer duration of time has kept the dollar lower.

On the domestic equity market front, the BSE Sensex ended 609.83 points or 1.18 per cent higher at 52,154.13, while the broader NSE Nifty advanced 151.40 points or 1 per cent to 15,314.70.

Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 37.33 crore on Friday, according to exchange data.

Brent crude futures, the global oil benchmark, rose 1.23 per cent to USD 63.20 per barrel.

According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee appreciated for the second straight session against the dollar amid improved risk appetite lifted by hopes that the global economy could be poised for a quick rebound.

Iyer added that likely intervention from the RBI capped gains.

Meanwhile, the safe haven dollar started the week near two-week lows on Monday afternoon trade, as optimism about COVID-19 vaccine rollouts and a planned USD 1.9 trillion US stimulus package drove up riskier currencies and stock markets across Europe and Asia. PTI DRR MR MR