Indian rupee had a good recovery on Monday and it recovered by 46 paise to end at 89.20 (provisional) against the U.S. dollar. This sudden increase followed the sale of more dollars by the banks and importers, and a fall in world prices of crude oil, which contributed to the pressure on the domestic currency.
In the foreign exchange market, the rupee started off positively to open in the day at 89.46 and carried trading between 89.05 and 89.50 during the day. The currency performance was a sharp contrast to the steep fall on Friday in which the currency had fallen 98 paise to record a lifetime low of 89.66 amidst intense demand of the U.S. dollar, heavy selling in the equities market, and trade related uncertainties in the world.
Market observers pointed out that the marginal fall in the dollar index, which dropped by 0.02 percent at 100.15 also helped. Meanwhile, the price of Brent crude declined in the futures trade by 0.78 percent to $62.07 per barrel, which eased the pressure of imports on rupee since India is a major importer of crude oil.
Nevertheless, the domestic equity markets continued to be weak. The Sensex and Nifty fell by 331.21 and 108.65 points respectively to end at 84,900.71 and 25,959.50 respectively as the investors maintained a guarded stance. The foreign institutional investors (FIIs) still resorted to selling selling equities valued at 1766.05 crore in the share market on Friday, exchange data indicates.
With the currency volatility, the overall macroeconomic position of India was partly stable. According to the report prepared by the Reserve Bank of India, the amount of the country foreign exchange reserves increased to 692.576 billion by the end of the week ending November 14 after the increase of 5.543 billion dollars. This rush was greatly credited to the fact that the value of the gold reserves in the country had increased.
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