The rupee gained further against the US dollar as the day progressed, with the Indian currency pulling back below the 71 mark in noon trade. The rupee was trading at 70.87 a dollar, as compared to its previous close of 71.17. After opening flat at 71.16, the rupee traded in the range of 70.86 to 71.19 so far during the day. The rupee had gained for the fifth successive session on Monday, during which it had climbed 62 paise.
Here are five things to know about the rupee’s climb against the US dollar:
1) The rupee’s recent pullback against the US dollar has been partly attributed to a softening in global crude oil prices from recent highs. Oil prices skidded to their lowest close in two weeks, Bloomberg reported, as worries of a stalemate in US-China trade talks fueled concerns about global growth. Crude oil futures fell 0.6% in New York, following a 4.6% decline last week.
2) However, the upside in the rupee is being capped by the broad strengthening of the US dollar. Against a broad basket of global currencies, the dollar traded near its the strongest level since early January, having recouped most of the losses stemming from the Federal Reserve's dovish stance since the start of the year. The dollar has recouped most of its year-to-date losses, as central banks around the world tilt more toward the dovish side, leaving the Fed’s shift to a patient stance on further monetary tightening as less of an outlier than it was weeks ago.
3) “Overall softer crude prices and a stronger dollar could offset each other, leading to a mostly range-bound USD-INR,” forex advisory firm IFA Global said in a note.
4) Despite the recent pullback, the rupee is still down about 2% against the US dollar so far this year. Foreign investors bought $391.41 million and sold $442.26 million in the Indian domestic equity and debt markets, respectively, this year.
5) Investors are closely watching the progress of this week’s high-level US-China trade talks ahead of a March 1 deadline for higher tariffs. Back home, the government will announce inflation data for January and industrial output data for February later today. (With Bloomberg Inputs)