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Indian rupee soars 43 paise to 73.39 against US dollar

Foreign fund inflows, positive domestic equities and a weak dollar boosted the rupee

Mumbai: The rupee strengthened 43 paise to end at 73.39  against the US dollar on Friday supported by persistent foreign fund inflows and weak American currency.

At the interbank forex market, the domestic unit opened on a flat note but soon gained ground and finally ended at 73.39 against the greenback, higher by 43 paise over its previous close of 73.82.

Sustained foreign fund inflows, positive domestic equities and a weak US dollar further boosted the local unit, forex traders said.

Sharp appreciation

"A sharp appreciation of 0.75 per cent has been witnessed in rupee amid persistent portfolio inflows and as the domestic currency was eventually seen mirroring the decline in the dollar index," said Sugandha Sachdeva VP-Metals, Energy and Currency Research, Religare Broking.

Sachdeva further said that "in the current scenario, the unfettered money printing drive by major central banks has fuelled the ’risk on’ trade in markets even as the COVID-19 crisis rages on."

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.72 per cent to 92.33.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,164.32 crore on Thursday, according to exchange data.

RBI intervention

The rupee has been surging since Monday, when the Reserve Bank of India appeared to halt its recent policy of intervening heavily in the market against the currency, and hit its highest in nearly six months on Friday, on course for its best week since late December 2018.

Traders said they expected the bank to return to the market soon, however, in part to ensure it builds more forex reserves, $60 billion to $535.35 billion so far this fiscal year.

"The RBI must have let the currency appreciate to shatter the complacency but this may not be the case going forward and we might see the central bank again coming into action," said Gaurang Somaiya, an FX analyst at Mumbai-based broker and trading firm Motilal Oswal Financial Services.