The rupee continued its winning streak for the fifth straight session, moving up two paise against the US dollar on Friday, August 4, settling at 74.15 (provisional) following the announcement of the RBI governor’s decision. Shaktikanata Das-led statement on monetary policy. In the interbank currency market, the local unit opened at 74.11 and registered an intra-day high of 74.10. It witnessed a low of 74.22. During an early trading session, the domestic unit gained seven paise to 74.10 against the greenback. The rupee eventually ended at 74.15, two paise higher than the previous close.
On Thursday, August 5, the local unit settled at 74.17 against the US currency. Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, climbed 0.18 percent to 92.41. The rupee witnessed a winning streak throughout the week, mainly due to a strong rally in domestic equities.
The Reserve Bank of India (RBI) held its benchmark rate unchanged at four percent at its bimonthly meeting of the monetary policy committee, but maintained an accommodative stance as the economy has yet to recover from the impact of the second wave of COVID-19-19.
However, the central bank raised its projection of retail inflation for the current fiscal year to 5.7 percent due to supply-side constraints, robust crude oil prices and higher commodity costs.
What analysts say:
Mr. Amit Pabari, MD, CR Forex:
The US jobs report, released tonight, is expected to keep attention intact. The US is expected to add 870K jobs in July and the unemployment rate is expected to hit a further low of 5.7 percent. If they deliver the same, we could see DXY reaching 92.65 to 92.80 levels. Overall, the impact of IPO flows could not help the currency today as RBI policy could dominate other factors.
For the near term, we expect the USDINR pair to soon bottom near the 74.00-74.10 levels and recover to the 74.40-50 levels. If that level is convincingly exceeded, it would show 74.90-75.00.”
Kshitij Purohit, Lead International & Commodities at CapitalVia Global Research Limited:
During early trading on Thursday, the USD/INR rose to 74.23, up 0.05 percent over the course of the day. During the three-day decline, the Indian rupee (INR) pair fell to its lowest level since June 22, before a recent corrective pullback. The USD/INR bears will be challenged by the demand for a safe haven for the US currency and the Fed’s tapering talk, not to mention pre-data/event concerns.
The US Dollar Index (DXY) has fallen the most this week as market participants await critical data amid the stimulus deadlock. Fears of a Covid outbreak prompted the U.S. Centers for Disease Control and Prevention (CDC) to issue a temporary ban, which expires Oct. 3, after the CDC noted the strongest increase in cases in February. .”
Domestic stock markets today:
In the domestic stock market, the BSE Sensex finished 215.12 points or 0.39 percent lower at 54,277.72, while the broader NSE Nifty fell 56.40 points or 0.35 percent to 16,238.20.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities:
“After rallying for four consecutive sessions and scaling new milestones, benchmark indices lost losses as investors made gains in Reliance Industries and other select blue-chip stocks. The RBI’s decision to leave the key rate unchanged failed to convince investors as the status quo had already been priced in the market.
Technically, the Nifty has formed a strong breakout formation on the weekly charts, indicating further upward trend from current levels. We believe the medium-term trend is bullish and buying on dips and selling on rallies would be the ideal strategy for positional traders.”
According to exchange data, the foreign institutional investors were net sellers in the capital market on Aug. 5 when they sold shares worth Rs 719.88 crore. Futures on Brent oil, the global oil benchmark, rose 0.59 percent to $71.71 a barrel.