Fall in global crude prices and increased sale of dollars by exporters resulted in rupee closing up by 50 paise at 72.50 per US dollar Friday. Rising rupee was aided by the fall in dollar following the US midterm elections on Tuesday, which led to expectations that the outcome would make further fiscal stimulus measures unlikely. The US election results showed Democrats wresting control of the House of Representatives from the ruling Republican party. The dollar, however, later staged a recovery after the US Federal Reserve kept interest rates unchanged but indicated a hike next month.
Dealers said sale of dollars by exporters and banks supported the Indian rupee, as also the positive inflow of investment by the foreign investors. At the Interbank Foreign Exchange (forex) market, the rupee opened on a firm note at 72.68 from Tuesday’s close of 73. It climbed to a high of 72.45, and finally ended at 72.50, up 50 paise over its last close. The forex market was closed on Wednesday and Thursday on account of Diwali and Diwali Balipratipada, respectively.
The rupee had rebounded by 12 paise to end at 73 per US dollar Tuesday. In the last two trading sessions, the rupee has gained 62 paise. Price of international benchmark, Brent crude slipped below the $70 per barrel mark on Friday before a weekend meeting of major oil producing nations in Abu Dhabi. This aided the positive sentiment of the rupee. Brent crude oil futures breached the $70 per barrel mark and were trading 1.08 per cent lower at $69.90.
The Financial Benchmark India Private Ltd set the reference rate for the rupee/dollar at 72.734 and for rupee/euro at 82.5195. The reference rate for rupee/British pound was fixed at 94.8737 and for rupee/100 Japanese yen at 63.84.
Benchmark stock indices ended slightly lower on Friday. The 30-share Sensex fell 79.13 points, or 0.22 per cent, to close at 35,158.55, while the broader NSE Nifty slipped 13.20 points, or 0.12 per cent, to 10,585.20. Reduction in pace of sales of stock by foreign portfolio investors in the equity and bond markets have helped the currency. While the fall in crude oil prices and bond yields have been supporting the markets, upcoming state elections pose near term risks.
“Debt FPIs have taken a breather into November after $2.7billion outflows in the last two months. At the short-end of the curve, markets are no longer pricing in rate hikes in December, pushing 2-year yields to sub-7.5 per cent, three-month low. Renewed selling pressure could surface on any bounce in oil prices or as markets turn attention to the December’s state elections and fiscal worries return. The latter also ties into the ongoing RBI-government tussle, as government seeks a large one-off transfer of the RBI’s reserves to boost fiscal revenues, while the central bank has resisted the move,” Radhika Rao, economist, Group Research at DBS Bank wrote in a note Friday.
Shares of oil marketing companies HPCL and BPCL and airlines gained up to 5 per cent Friday on softening of crude oil prices.
The scrips of Hindustan Petroleum Corporation Ltd rose by 4.70 per cent, Bharat Petroleum Corporation Limited went up by 2.61 per cent and IOC 1.94 per cent on BSE. Besides, shares of InterGlobe Aviation went up by 2.95 per cent and SpiceJet 2.83 per cent.