Rupee gains sharply, stocks up sharply

Rupee gains sharply, stocks up sharply

Corporate investments, a decline in global crude and some traders bet on the currency to reverse a recent slump in performance, as well as a decline in global crude, the stock price went up sharply on Thursday, dealers said.

The previous close was at 82.55 per day, as opposed to 82.81 per day. The depreciated around 10 per cent against the dollar in 2022.

Dealers said that while the US Federal Reserve decision to opt for a lower quantum of rate increase in December had led to hopes that the American central bank would slowed down on monetary tightening, minutes of the Fed's latest meeting had not provided firm cues.

The dollar is going to strengthen and consequently dragging down emerging market currencies like the rupee because of higher US interest rates.

For a second day, the gain was supported by stronger regional peers. The December FOMC minutes barely affected the FX market, said Dilip Parmar, research analyst at HDFC Securities.

The December jobs data will be the focus of the December ADP jobs data. A firm ADP number could provide a bit of support for the US yields and the dollar. He said the rupee continues to be in a narrow range from 82.50 to 83.

The rupee strengthened above 82.65 $1 and 82.55 $1 with the fall in global crude helping to ease fears about India's current account deficit, according to a dealer with a state-owned bank.

The price of crude fell over 9 per cent over the last two days, according to Reuters. India is the third largest importer of the commodity, so a decline in crude prices gives comfort to the domestic trade deficit.

The rupee could fare better in the coming weeks, as seasonal demand for dollars by oil importers has likely subsided after December, analysts said.

There was a corporate inflow today, but it has been underperforming its peers for a long time. Especially from mid-November, said Anindya Banerjee, VP Currency Derivatives Interest Rate Derivatives at Kotak Securities.

If you were to line up the top 25 or 26 currencies in the world, except for some currencies like the Russian rouble or the Israeli currency, it has been one of the worst performers. A lot of the underperformance was linked to the huge demand from the oil marketing companies. If demand has abated, then we could see scope for the rupee to catch up and head towards 81 $1 or even 80 $1 levels, he said.

The rupee depreciated 1.6 per cent against the dollar in December despite the index having fallen close to 2.5 per cent during the period.