On Tuesday, the rupee turned around its record lows to appreciate 19 paise to close at 91.71(provisional) against the US dollar, with the help of a lower dollar index and hopes on India- European Union free trade agreement talks.
The domestic currency started at 91.82 against the greenback in the interbank foreign exchange market and dropped to 91.90 in the early trade. It however later trimmed down on losses and closed the session at 91.71, which was an increase of 19 pais over its earlier close.
Rupee reached an all time low of 92 per dollar on Friday, January 23 and closed a little higher at 91.90. On Monday, January 26, it was the Republic Day holiday, which made forex and equity markets close.
Market participants indicated that the slight improvement of the rupee went hand in hand with a slight fall in the US dollar index which tracks the greenback against a basket of six major currencies. At late trade, the index was trading 0.02% down at 97.01.
The price of crude oil remained more or less stable with the world benchmark Brent crude slightly increasing 0.02 per cent to 65. 60 per barrel in the future market, which was a relief to the emerging market currencies, such as the rupee.
Sentiment was also supported by domestic equity markets. BSE Sensex increased by 319.78 to reach 81,857.48 and NSE Nifty increased by 126.75 to close at 25,175.40.
In the meantime, the foreign institutional investors (FIIs) also remained net sellers, selling equities of 4,113.38 crore on Friday, as per exchange information.
At the macroeconomic level, the foreign exchange reserves of India shot to $701.367 billion and $14.167 billion or the week ending January 16 and January 16 respectively, the Reserve Bank of India said after an incremental of $392 million last week.
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