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Rupee rises 21 paise to hit a month high of 70.92

The weakening Dollar Index also seemed to be contributing to the appreciation of rupee. (Reuters)

The rupee on Friday rose 21 paise to close at a month high of 70.92 against the dollar on the back of appreciation in Asian currencies, especially in the Chinese yuan, on hope of trade talk between the US and China. The weakening Dollar Index also seemed to be contributing to the appreciation of rupee.

After touching a three-year high of 99 on September 03, 2019, the Dollar Index fell to 98.14 on Friday. As a result, most of the Asian currencies appreciated against the dollar. In the last five trading sessions, the Thai baht rose 0.56%, the Malaysian ringgit rose 0.33%, the South Korean won rose 1.71%, the Indian rupee rose 1.12%, the Indonesian rupiah rose 0.96% and the Chinese renminbi rose 0.53% against the greenback.

MV Srinivasan, vice-president at Mecklai Financial, said that on the hope of US-China deal, risk of trade war seems to be unwinding, because of which the Asian currencies have been gaining. “As the rupee has been following the movement in the Chinese yuan lately, the rising yuan is believed to have influenced the Indian currency,” he added.

However, Sajal Gupta, head–forex, Edelweiss Securities, believes that the appreciation in the domestic currency to last only for a short duration. “Although, a rising yuan is good for the rupee but it has been very volatile in recent times. The recent inflation number, excluding gold and industrial, is way below the target. These bad economic conditions can push the rupee downwards again,” he said.

The rupee was earlier trading at a six paise premium on the non-deliverable forward (NDF) market. “This has come down to just one paisa as the buying pressure has been pulled off from dollars in terms on the rupee. The international players have also stopped buying dollars,” said Abhishek Goenka, founder and CEO, IFA Global.

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Source: Financial Express