Rupee recovers 29p to 75.66 on growth optimism, weak dollar

(Eds: Updates with expert comment)

Mumbai, May 26 () The rupee appreciated by 29 paise to close at 75.66 against the US dollar on Tuesday tracking weakness in the American currency as easing of COVID-19 lockdown measures fuelled growth optimism.

Forex traders said weakness in the US dollar against major world currencies overseas and easing of lockdown restrictions across the world boosted investor sentiment and supported the local unit.

At the interbank foreign exchange, the rupee opened higher at 75.69 and moved in a range of 75.62 to 75.74 in day trade.

The rupee finally ended at 75.66, registering a rise of 29 paise over its previous close. On Friday, rupee had settled at 75.95 against the US dollar. The forex market was closed on Monday for Id-Ul-Fitr.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.44 per cent down at 99.42.

Meanwhile, foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 1,353.90 crore on Friday, according to provisional exchange data.

"Rupee led gains among emerging market currencies as investors factor in prospects of economies moving toward reopening," said Devarsh Vakil, Head Advisory, HDFC securities.

The dollar index was unable to sustain 100 mark and lost 0.45 per cent to 99.42 as many economies ease restrictions, with Japan lifting its state of emergency and select European countries allowing more sectors to reopen for business, Vakil said.

"The weakness in broad dollar index supported the rupee in today's trade. However, the gains will be limited due to month-end dollar demand from oil importers," he added.

According to Jateen Trivedi, Senior Research Analyst at LKP Securities, the rupee appreciated on likely overseas inflows into local stocks amid a weak greenback.

Meanwhile, in India, the death toll due to COVID-19 rose to 4,167 and the number of cases climbed to over 1.45 lakh, according to Health Ministry data.

The number of cases around the world linked to the disease has crossed over 55.12 lakh and the death toll has topped 3.46 lakh.

After rallying 414.11 points during the day, the 30-share BSE Sensex declined 63.29 points or 0.21 per cent to end at 30,609.30. The NSE Nifty ended 10.20 points or 0.11 per cent down at 9,029.05.

Brent crude futures, the global oil benchmark, rose 1.41 per cent to USD 36.03 per barrel.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.7868 and for rupee/euro at 82.8183. The reference rate for rupee/British pound was fixed at 92.4927 and for rupee/100 Japanese yen at 70.55. DRR MR MR