Re soars on FII outflows

The rupee appreciated 14 paise to settle at 83.05 (provisional) against the US dollar on Friday, boosted by a firm trend in equity markets and a sharp correction in the greenback against major rivals overseas.

However, selling pressure from foreign equity investors and rising crude oil prices in international markets weighed on the domestic unit, forex traders said. The rupee opened strong at 83.13 against the US dollar and moved in the range of 83.03 to 83.13 against the greenback. It finally settled at 83.05 (provisional), registering a gain of 14 paise from its previous close.

On Thursday, the rupee settled three paise higher at 83.19. Analysts said the rupee also strengthened due to a significant decline in India’s current account deficit (CAD). However, rising interest rates and US bond yields prompted foreign investors to stay in selling mode. CAD almost halved to $9.2 billion, or 1.1 per cent, of GDP in the first quarter of the current fiscal from $17.9 billion (2.1 per cent of GDP) a year ago, the Reserve Bank of India said on Thursday.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said: “Indian rupee strengthened on Friday on weak US dollar index and a decline in crude oil prices. Positive tone in domestic markets also strengthened the rupee. However, FII outflows capped sharp gains”. The dollar declined on concerns over looming US government shutdown fears.