After a big overnight rally, the rupee on Friday retreated by 4 paise to end at 64.15 against the US dollar even as the greenback struggled to bounce back globally. A strong month-end dollar demand from importers and corporates largely weighed on the forex trade. However, robust capital inflows into equities and debts largely cushioned the fall.
Foreign portfolio investors (FPIs) bought shares worth a net Rs 1,869.92 crore yesterday, as per provisional data. The home currency opened weak at 64.19 from Thursday’s closing value of 64.11 at the Interbank Foreign Exchange (forex) market. It was trapped in a narrow-range against the dollar and moved between 64.12 and 64.24 most part of the day before ending at 64.15, showing a modest fall of 4 paise, or 0.06 per cent.
Yesterday, the local unit had appreciated by a solid 26 paise. For the week, the rupee consolidated gains by a good 17 paise. The RBI, meanwhile, fixed the reference rate for the dollar at 64.1483 and for the euro at 74.9829. In cross-currency trades, the rupee recovered smartly against the pound sterling to end at 83.98 from 84.23 per pound but dropped further against the euro to settle at 75.15 from 75.05 earlier.
The local unit also fell back against the Japanese yen to finish at 57.66 per 100 yens from 57.58 yesterday. The rupee yesterday rallied to a fresh 2-1/2 month high after the US Fed hinted that it would move slow on monetary policy tightening. The US dollar is facing a sustained pressure after Trump’s disappointing result in the Senate on voting down Obamacare and also some caution ahead of US GDP announcement later in the day.
In the meantime, domestic bourses remained under modest selling pressure for the second-straight day and showed signs of fatigue following the series of record-breaking rally amid profit-taking at higher levels even as disappointing quarterly earnings weighed on bank and pharmaceutical shares. The dollar index, which measures the greenback against a basket of currencies was down at 93.25 during Asia trade — its lowest since May last year.
In forward market today, premium for dollar eased on mild receivings from exporters. The benchmark six-month premium payable in December edged lower to 119-121 paise from 120.5-122-5 paise and the far forward June 2018 contract also moved down to 265-267 paise as compared to 266.5-268.5 paise.
On the International commodity front, crude prices edged higher for a fifth straight session on Friday to hit a fresh two-month high and on track to post the strongest weekly gains this year as investors digested signs of an easing oversupply picture. US crude and gasoline inventories fell much more steeply than expected this week and the world’s biggest oil exporter Saudi Arabia said it would further reduce oil output in August. Brent crude futures were up 18 cents at USD 51.67 a barrel in early Asian trade.