NEW DELHI, June 5: The rupee pared its early gains to close almost flat at 75.58 against the US currency on Friday due to dollar demand from banks and rising crude oil prices.
Forex traders said positive domestic equities, sustained foreign fund flows and the revival of business activities are supporting the rupee but dollar buying by banks and rebounding crude prices are restricting its gains.
Crude oil prices rose to a three-month high of USD 41 per dollar ahead of the talks of Opec and its allied about extending the production cuts.
At the interbank forex market, the rupee opened strong at 75.38, but later pared gains to settle at 75.58 against the US dollar, down 1 paisa over its last close of 75.57.
On a weekly basis, the domestic unit has appreciated by 4 paise. It had settled at 75.62 on May 29.
“Rupee marked second weekly gains amid strong inflows from equity sales, a weaker dollar and risk-on moods. State-run banks are buying dollar aggressively on any dips around 75,” said Devarsh Vakil, Head Advisory, HDFC securities.
“The USD/INR spot has been trading in a very tight range 75-75.65 as investors await catalyst to move forward and take positions,” said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Currently, the spot is in the indecisive market and going forward the focus will be on Jio-Mubadala deal-related dollar flows, US-China trade spat and whether there is a second wave of infection, he said.
The expectations of more stimulus measures from the US government drove the optimism in the market, however, Trump administration postponed the meeting to next week crashing investors’ hopes, he said. Vakil said that “market participant will look for cues about the next action of Reserve Bank of India when it releases minutes of its unscheduled policy meeting last month.”
On the equities front, the 30-share index settled 306.54 points or 0.90 per cent higher at 34,287.24 and the NSE Nifty rose 113.05 points or 1.13 per cent to 10,142.15.
Foreign institutional investors were net buyers in the capital market, as they bought equity shares worth Rs 2,905.04 crore on Thursday, according to provisional exchange data.
Brent crude futures rose 2.93 per cent to USD 41.16 per barrel.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.15 per cent to 96.82.
Meanwhile, the number of cases around the world linked to the coronavirus disease crossed 66.56 lakh and the death toll has topped 3.91 lakh.
In India, the death toll due to COVID-19 rose to 6,348 and the number of infections rose to 2,26,770, according to the health ministry.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.5290 and for rupee/euro at 84.6353. The reference rate for rupee/British pound was fixed at 94.6560 and for rupee/100 Japanese yen at 69.22. (PTI)
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