After slumping to 6-month low, rupee gains today as crude oil prices retreat


NEW DELHI: After weakening to a near-six month low against the US dollar on Wednesday, the rupee gained ground against the greenback in early trade Thursday as global crude oil prices eased and as some foreign banks sold the US currency for exporters noting relatively higher dollar/rupee levels, dealers said.

The domestic currency today opened at 74.8000 per US dollar, stronger than 74.9750 per dollar at close on Wednesday. The rupee was last at 74.7775 to a US dollar.

Crude oil futures for November delivery on the New York Mercantile Exchange declined $1.50 per barrel to close at $77.43 per barrel on Wednesday, while Brent crude futures for November shed $1.8 to close at $81.08 to a barrel.

Earlier this week, crude oil prices had risen to multi-year highs after the Organization of the Petroleum Exporting Countries stuck to a plan of increasing output by only 440,000 barrels per day till the end of the year.

The surge in oil prices has brought worries about higher domestic inflation and pressure on trade deficit back to the fore as India is a major importer of the commodity.

Accordingly, on Wednesday, the rupee lost 0.7%, settling at the lowest level since Apr 23.

Government bonds were steady with yield on the 10-year benchmark at 6.10%, 2031 bond last at 6.27%, one basis point lower than previous close.

Investors kept on the sidelines ahead of the Reserve Bank of India’s monetary policy statement on Friday, with the consensus expectation being that the benchmark policy repo rate will be held steady at 4.00%.

However, some traders speculated that the central bank could signal its intention to raise the reverse repo rate –currently the operative overnight cost of funds for money markets – from 3.35% as core inflation remains elevated.

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