Rupee in recovery mode, gains 11 paise

Mumbai
13 Jun 2017

The rupee staged a spectacular rebound from its one-week low against the American currency and ended higher by a solid 11 paise at 64.33 due to fresh bouts of dollar selling by exporters and banks.
Depressed global sentiment in the midst of an imminent US central bank rate hike alongwith disappointing IIP numbers added some discomfort for the home currency initially.
Traders are cautious as the Fed is scheduled to announce its policy decision on Wednesday where it is expected to raise its benchmark interest rate for the second time this year.
Lacklustre local equities along with modest amounts of capital outflows too weighed on currency trade.
Foreign funds sold shares worth Rs 169.25 crs on Monday, as per the provisional data from exchanges.
On the macro front, retail inflation slumped to record low of 2.18 per cent in May driven by sharp drop in food prices, strengthening government's case for lowering of interest rate by RBI at its next policy meet in August.
Earlier this month, RBI left key interest rate unchanged as it wanted to be more sure that inflation will stay subdued.
While, Industrial production growth slipped to 3.1 per cent in April from 6.5 per cent a year ago.
The domestic unit resumed virtually steady at 64.44 at the Interbank Foreign Exchange (Forex) Market, but soon drifted to a fresh low of 69.49 owing to renewed dollar demand from importers after government data showed industrial output fell sharply.
However, rupee made a solid rebound in late afternoon trade following dollar selling by exporters and managed to close at its higher level at 64.33, showing a good gain of 11 paise, or 0.17 per cent.
It had plunged by 20 paise on Monday.
On the global front, the greenback traded little changed as traders awaited the start of a two-day meeting of the U.S. Federal Reserve for signals on the pace of future monetary tightening.
The dollar index, which tracks the U.S. currency against a basket of six major rivals, was down 0.13 per cent at 97.02.
In cross-currency trades, the rupee fell bacl modestly against the pound sterling to settle at 81.87 from 81.83 per pound, but recovered against the Euro to end at 72.13 from 72.36 on Monday. (PTI)