The rupee reported more gains against the dollar on Thursday but the ECB’s stimulus announcement in the evening has cast doubts on the durability of the current rally. Bond purchases by the ECB, as part of its stimulus package, are likely to depreciate the euro as well as all other major currencies against the dollar, analysts said.
The rupee continued its winning streak against the dollar as it gained 52 paise to close at 71.14 to the greenback on hopes of a reduction in the trade tensions between the US and China. However, it was a different story on the stock markets as caution ahead of key data release saw the benchmark indices ending in the red.
At the inter-bank forex markets, the rupee opened strong at 71.46 and hit a day’s high of 71. It finally closed at 71.14, showing a gain of 52 paise over its previous close. The unit had closed at 71.66 against the greenback on Wednesday.
The rupee got a lift after China welcomed US President Donald Trump’s “goodwill” gesture to postpone a planned tariff hike on Chinese products. The two countries are set to hold talks next month to end their trade war.
“Along with the other Asian currencies, Indian rupee also gained amid ease of trade tensions between US-China,” V.K. Sharma, head PCG and capital markets Strategy, HDFC Securities said.
On Wednesday, Trump had postponed higher tariffs on the $250 billion worth of Chinese goods from October 1 to October 15 after China unveiled the first set of US goods to be excluded from its additional tariffs.
Lower crude oil prices and inflows from foreign portfolio investors (FPIs) also helped the currency.
Provisional data from the NSE on Thursday showed foreign investors having made net purchases to the tune of Rs 784 crore. Brent crude futures, fell 1.13 per cent to trade at $60.12 per barrel
Moreover, the dollar was weak against other currencies. The dollar index, which measures its strength against a basket of six currencies, fell 0.13 per cent to 98.51.
The rupee has appreciated by 125 paise in the last six trading sessions.
