Rupee spurts 25 paise against dollar on Fed boost

Marco Green
July 11, 2019

That apart, foreign fund flow, stock-specific action, crude oil prices and rupee movement against the USA dollar could also steer indices. By afternoon, the domestic currency was trading higher at 68.42, up by 16 paise compared with its previous close of 68.58, registered on Wednesday.

Just a hint that the US Federal Reserve may go in for an interest rate cut was enough to send a whole basket of Asian currencies, including the Indian Rupee, getting stronger against the US dollar.

The rupee had declined by 7 paise to close at 68.58 against the United States dollar Wednesday, pressured by persistent foreign fund outflows and firming crude oil prices.

The rupee darted up 14 paise to finish at 68.44 against the US dollar July 11 after dovish comments by US Federal Reserve chair Jerome Powell boosted emerging market currencies.

In prepared remarks to a congressional committee, Powell said concerns about trade policy and a weak global economy "continue to weigh on the US economic outlook" and the Fed stood ready to "act as appropriate" to sustain a decade-long expansion. Mr Powell also expressed concerns about the continued trade tensions between the USA and China and although there was no commitment to cut interest rates these comments have increased market expectations for a rate cut at the end of July.

A weak trend at the domestic equity markets and global trade tensions also kept sentiment subdued, traders said.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 674.26 crore Tuesday, provisional data with the exchanges showed.

The dollar index, which measures the USA currency's strength against a basket of major currencies, was at 96.906, down 0.2% from its previous close of 97.104.

After swinging almost 400 points during the day, the 30-share BSE Sensex settled 173.78 points or 0.45 per cent lower at 38,557.04.

There was a rub-off on the government bonds as well, with the 10-year bond gaining slightly to 6.555% yield to an earlier rate of 6.544%.

Other reports by Click Lancashire

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