Rupee Gains For Second Straight Day, Settles At 74.20 Against Dollar

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Rupee Gains For Second Straight Day, Settles At 74.20 Against Dollar

The rupee is down 3.95% against the dollar so far this year

The rupee appreciated for a second straight day on Friday supported by weakness in the US dollar overseas, as investors awaited more clarity on US election results, and lower crude oil prices. It moved within in a range of 35 paise, between 73.27 and 74.22, against the greenback, having begun the day stronger at 73.98 against the US currency compared to its previous close of 74.38. A rally in domestic equities amid continuous foreign fund inflows supported the domestic currency.

The dollar index - which measures the greenback against six other currencies - was last seen trading 0.29 per cent lower.

The NSE Nifty 50 index finished 1.18 per cent higher at 12,263.55 and the S&P BSE Sensex ended up 1.34 per cent at 41,893. Both the indices gained more than 5 per cent this week, marking their best weekly performance since June.

Crude oil prices fell towards the $40 per barrel as new lockdowns in Europe to halt surging COVID-19 infections sparked concern over the demand outlook while drawn-out vote counting in the US election kept markets on edge. Brent futures - the global benchmark for crude oil - were last seen trading 2.10 per cent lower at $40.07 per barrel. 

Analysts say the rupee is likely to move sideways in the near term on mixed cues. 

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"The sentimental impact on rupee coming from mixed updates has remained relatively mild compared to other Asian currencies. Hence, when other currencies depreciated by more than 1.5-2 per cent on intraday basis, the rupee remained marginally weak showing the RBI's activeness in managing the volatility and preventing rupee from depreciating sharply," said Amit Pabari, managing director at forex advisory firm CR Forex.

"Weakness in the dollar and rally in equities, the momentum of the rupee suggests that the (USD-INR) pair is paving way close to 73.20-73.50 levels with some sessions of spikes," he added. 

Although the rupee has recovered 3.52 per cent from an all-time low, registered in April, it is still down 3.95 per cent against the greenback so far this year. 

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