The Indian rupee today surged against the US dollar amid broad weakness in the greenback and a rally in domestic equity markets. The rupee rose to two-month high of 73.37 per US dollar in early trade as compared to previous close of 73.69. Most Asian emerging currencies firmed modestly today, as the dollar nursed losses after US Federal Reserve Chairman Jerome Powell on Friday indicated that the central bank would be cautious in winding back monetary policy.
On Friday, the rupee surged 53 paise to close at 73.69 against the US dollar taking cues from bullish equities.
“The rupee-dollar likely to trade in a wide range of 73.30-74.00 zone as nationalized banks could regain their position as the Jackson Hole event is now behind us. Broadly, any appreciating move is not favorable for the exporters & hence RBI could try to keep it on a depreciating mode by building their USD reserve kitty. On another side, the given move is an opportunity for the importers to cover every dip close to the 73.30 mark. The volatility is likely to remain high and there are higher chances that the USD-INR pair could recover back to 74-74.10 levels," said CR Forex Advisors in a note.
The US dollar today hovered near multi-week lows in the wake of Fed Chair Jerome Powell laying out a slower-than-expected path to rate hikes, as traders' focus shifted to U.S. jobs figures due on Friday for clues on a tapering timeline.
The benchmark 10-year bond yield eased slightly to 6.24% compared to its close of 6.25%.
On the domestic equity market front, BSE Sensex was trading over 500 points higher while Nifty advanced nearly 1%. Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth ₹778.75 crore, as per exchange data. (With Agency Inputs)