Indian rupee staged an incredible comeback against the US dollar
The Indian rupee staged an incredible comeback against the US dollar after its relentless downtrend for the sixth straight week and ended higher by a solid 15 paise at 68.03 despite the outlook for the greenback remaining highly bullish.
It has been a rather quiet holiday-shortenend trading week for the home currency, though it largely shrugged off the early volatility amid growing optimism ahead of the annual budget with concrete policy measures to attract robust foreign flows. Fresh unwinding of long dollar positions by banks and exporters alongside revival in foreign capital inflows mainly aided the rupee pull back.
A spectacular rally in domestic equities which helped stocks to post their highest weekly gains in nearly eight months lending further support to the recovery momentum. Foreign funds and overseas investors continued their portfolio buying spree and infused USD 158.80 million during the week, also bolstered sentiment.
At the Interbank Foreign Exchange (forex) market, the local unit resumed substantially higher at 68.05 against last weekend level of 68.18. But, the recovery shortlived as the currency market reacted sharply to global developments after US President Donald Trump’s reaffirmation of his protectionist stance sparked fresh concerns about the impact on funds flows to emerging and developing economies.
It kept descending after a brief range-bound period and hit a low of 68.23 owing to month-end dollar demand. However, the local unit made a smart rebound afterwards to climb a high of 68.01 before ending at 68.03, revealing a smart gain of 15 paise, or 0.22 per cent.
The rupee had depreciated by a whopping 76 paise during the six-week downtrend line — the longest falling spell since November 2015. The dollar index a measure of the US currency against a basket of peers ended modestly lower at 100.56.
In worldwide trade, the greenback ended little changed as a downbeat report on US fourth quarter growth dampened optimism over the outlook for the economy, despite positive consumer sentiment data amid caution ahead of FOMC meet next week.