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Rupee surges 28 paise to settle at 83.14 against US dollar

Forex analysts attributed the steep rise in the local unit to a number of positive factors
Last Updated : 03 June 2024, 11:30 IST
Last Updated : 03 June 2024, 11:30 IST

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Mumbai: The rupee jumped to over two-month high closing level and settled with a gain of 28 paise at 83.14 (provisional) against the US dollar on Monday, tracking over 3 per cent surge in domestic equity benchmarks after exit poll results predicted a firm comeback of the ruling BJP-led government for the third straight term.

Forex analysts attributed the steep rise in the local unit to a number of positive factors such as strong domestic macroeconomic data, inflow of foreign funds and a weak American currency against major Asian rivals.

Also, they said lower level of the crude oil prices after OPEC+ grouping's decision to maintain the status quo in the oil output supported the Indian currency.

At the interbank foreign exchange market, the local unit opened at 83.09 and moved between the peak of 82.95 and the lowest level of 83.17 against the greenback during intra-day deals.

The unit finally settled at 83.14 (provisional) against the dollar, registering a gain of 28 paise from its previous close.

On Friday, the rupee declined 13 paise to close at 83.42 against the US dollar.

Earlier, the rupee had closed at 83.13 against the dollar on March 21 this year. It had breached the 83.00 level on March 18.

Also, the local unit clocked the highest single-day rise since November 15, 2023 when it closed 24 paise higher.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the Indian rupee appreciated as domestic markets rallied after exit polls predicted a firm comeback of the BJP-led government for the third consecutive term.

"This may lead to political stability and may result in fresh foreign inflows. Strong macroeconomic data also supported the rupee... However, disappointing manufacturing PMI capped sharp gains," he said.

Besides, rise in risk appetite in global markets, a weak dollar and a decline in crude oil prices may also support the rupee even as investors are expected to remain cautious ahead of the Reserve Bank of India's monetary policy later this week.

"USD-INR spot price is expected to trade in a range of Rs 82.70 to Rs 83.50," Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 104.68.

Brent crude futures, the global oil benchmark, slipped 0.22 per cent to USD 80.93 per barrel.

On the domestic equity market, the 30-share BSE Sensex climbed 2,507.47 points, or 3.39 per cent, to close at lifetime high of 76,468.78 points. The broader NSE Nifty soared 733.20 points, or 3.25 per cent, to close at its fresh peak of 22,263.90 points.

According to analysts, market participants took cues from multiple exit polls released on Saturday, predicting a third term for the Prime Minister Narendra Modi-led government in the Lok Sabha elections. The results will be announced after counting of votes on Tuesday.

The finance ministry on Saturday said the country's Goods and Services Tax (GST) collections grew 10 per cent to Rs 1.73 lakh crore in May driven by an increase in domestic transactions, indicating a sustained economic momentum.

Foreign investors were net buyers of Indian equities on Friday as they purchased shares worth Rs 1,613.24 crore on a net basis.

FIIs bought shares worth Rs 95,467.56 crore and sold equities worth Rs 93,854.32 crore in one of the record foreign investor activities in the cash segment.

The government data released on Friday showed India's economy growing 8.2 per cent in the fiscal year that ended in March, cementing the country's position as the fastest-growing major economy in the world.

The central government's fiscal deficit during 2023-24 at 5.6 per cent of the GDP was better than previous estimates of 5.8 per cent on account of higher revenue realisation and lower expenditure, according to official data released on Friday.

The country's forex reserves dropped USD 2.027 billion to USD 646.673 billion for the week ended May 24, the Reserve Bank said on Friday. In the previous reporting week, the kitty had reached an all-time high of USD 648.7 billion after a jump of USD 4.549 billion.

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Published 03 June 2024, 11:30 IST

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