Rupee rises 5 paise to 87.45 against USD after inching close to 88-level in intra-day trade

Mumbai, Feb 10 (PTI) The rupee on Monday plunged 45 paise and moved closer to the 88 per US dollar-level, weighed down by the strength of the American currency tariff concerns, but eventually settled at 87.45, up 5 paise, following RBI intervention.

The American currency gained in the overseas market after US President Donald Trump's plans to impose 25 per cent tariffs on steel and aluminum imports, along with reciprocal tariffs targeting countries taxing US exports.

The move has added jitters over the global trade war with China's reciprocal duties coming into effect, they said.

At the interbank foreign exchange, the rupee opened at 87.94 and touched an all-time intraday low of 87.95 against the American currency during the session.

The local unit, however, pared the initial losses and finally at 87.45, higher by 5 paise from its previous close.

On Friday, the rupee recovered 9 paise from its all-time low level to close at 87.50 against the US dollar.

The rupee touched an all-time low closing level of 87.59 against the greenback on February 6.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.14 per cent higher at 108.18.

"The Indian rupee touched fresh record lows in early trades on weak domestic markets and a strong US dollar index. However, the rupee recovered early losses on supposed intervention by the Reserve Bank of India (RBI)," said Anuj Choudhary -- Research Analyst at Mirae Asset Sharekhan.

"Traders may take cues from inflation data from the US and India this week. USDINR spot price is expected to trade in a range of 87.25 to 87.80," Choudhary said.

Meanwhile, Brent crude, the global oil benchmark, rose 0.98 per cent to USD 75.39 per barrel in futures trade.

Reserve Bank Governor Sanjay Malhotra on Saturday said the market forces decide the value of rupee with respect to the US dollar and the central bank is not worried about day-to-day movement of the currency value.

Addressing the media after the meeting of Finance Minister Nirmala Sitharaman with the Reserve Bank board, Malhotra said the central bank focuses on the value of the rupee in the medium to long term.

Forex traders said the Indian rupee is trading with a negative bias as foreign banks went on a dollar-buying spree and importers scrambled to secure dollars, as they feared further depreciation amidst global uncertainty.

"The intra-day volatility in the currency was very high... The reserves of USD had grown up USD 1.05 billion to USD 630.61 billion as the RBI bought dollars amounting to about 7 billion in an attempt to shore up the reserves," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

"Today's intervention was a big one from the RBI, taking rupee down... 88.00 should act as a big support for rupee while 87.30 should be a support for the dollar. The range for tomorrow (Tuesday) should be between 87.30 and 87.70," he added.

In the domestic equity market, the 30-share BSE Sensex dropped 548.39 points, or 0.70 per cent, to settle at a week's low of 77,311.80, while the Nifty declined 178.35 points, or 0.76 per cent, to 23,381.60 points.

Foreign institutional investors (FIIs) offloaded equities worth Rs 2,463.72 crore in the capital markets on a net basis on Monday, according to exchange data.

Meanwhile, India's forex reserves rose USD 1.05 billion to USD 630.607 billion for the week ended January 31, the RBI said on Friday.

In the previous reporting week, the overall reserves had increased by USD 5.574 billion to USD 629.557 billion. PTI DRR TRB

Source: PTI