Rupee Up 40 Paise On Easing Tariff Worries, GST Reforms
At the interbank foreign exchange market, the rupee opened at 87.24 against the US dollar, touched an intraday low of 87.31 and a high of 86.91, and settled at 86.95 against Monday’s close of 87.35, registering a gain of 40 paise, its highest level in a month.
Mumbai: The Indian rupee appreciated 40 paise to close at 86.95 against the US dollar on Tuesday on positive global developments including Ukraine Peace initiatives, and an upbeat mood ahead of GST rationalization. However, bond yields jumped to a three year high on concerns that the proposed GST overhaul will bring down tax collections and make the government sell more debt to make up for the revenue shortfall. Bond yields and prices move in opposite directions.
At the interbank foreign exchange market, the rupee opened at 87.24 against the US dollar, touched an intraday low of 87.31 and a high of 86.91, and settled at 86.95 against Monday’s close of 87.35, registering a gain of 40 paise, its highest level in a month.
“The market had been underperforming in the last two months, however positivity is setting in on a host of factors such as the GST reforms, Ukraine Peace initiatives, FPIs turning buyers in Indian equities and a possible rate cut by FED in September. Today the rupee appreciated upto 86.91 giving importers an opportunity to buy dollars,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury.
“86.92 is the next support which the rupee needs to break while 86.80 is another support which, if crossed, could lead to the rupee touching 86.50. Tomorrow we need to see whether these levels will get broken or not. There is an opportunity for importers to buy dollars to hedge their payable at least for August and when the fall is upto 86.50 more hedging can be done,” added Bhansali.
The US President Donald Trump and Ukrainian President Volodymyr Zelensky had on Monday signaled cautious optimism about prospects for peace in Ukraine, after a high-level meeting at the White House with European leaders. The peace deal, if brokered, is likely to reduce additional tariffs/sanctions on India in relation to the purchase of Russian oil.
Meanwhile, Brent crude, the global oil benchmark, was trading lower by 1.04 per cent at $ 65.91 per barrel in futures trade. The dollar index, which gauges the greenback's strength against a basket of six currencies, was lower by 0.13 per cent at 98.04. Foreign Institutional Investors bought equities worth Rs 550.85 crore on Monday, according to exchange data. The 10-year yield closed at 6.51 per cent for the day after rising as much as five basis points earlier in the session.
