Mumbai

Therupee rose for the second consecutive session to close at 95.73 (provisional) against the US dollar on softening of crude oil prices and supposed intervention by the Reserve Bank. Forex traders said markets found some comfort after comments from US Secretary of State Marco Rubio hinted that diplomatic talks linked to the Iran situation were moving in a constructive direction.

Moreover, positive domestic equities and a decline in US treasury yields also supported the rupee. At the interbank foreign exchange market, the rupee opened at 96.30 against the US dollar, then touched an intraday high of 95.30 and a low of 95.68 against the US dollar in intraday trade. At the end of the trading session on Friday, the rupee was quoted at 95.73 (provisional), higher by 63 paise from its previous close. On Thursday, the rupee rebounded 50 paise from its all-time closing low to settle at 96.36 against the US dollar.

“We expect the rupee to trade with a negative bias on uncertainty between US and Iran, which may pressurise the rupee. However, optimism over peace deal and softening of crude oil prices may support the rupee at lower levels. “US Treasury yields are also easing, which may also support the domestic currency. USD-INR spot price is expected to trade in a range of 95.50 to 96.30,” said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.

Sahil Kapoor, Head of Products and Market Strategist, SVP, DSP Mutual Fund, in a research note, said it is the time to buy rupee assets and not bet against them. “Currencies, interest rates, and flows are inherently cyclical. Betting against the rupee at these depressed REER levels and tight inflation differentials is a low-probability trade. Conversely, the data suggests it is time to allocate toward rupee-denominated assets across both equities and bonds,” he said.