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Rupee has seen an increase of 172 paise against the dollar in 4 consecutive days.

The rupee has shown tremendous strength against the dollar in the month of May. In just 5 trading days, the rupee has seen an increase of more than 1.25 percent against the dollar. That too at a time when circumstances are constantly changing in West Asia. Sometimes ceasefire is announced. Sometimes threats are being made from America and Iran. Due to which there has been a lot of fluctuation in the prices of crude oil. If we talk about Friday only, the rupee has seen an increase of 71 paise against the dollar. Whereas the prices of crude oil still remain above $100 per barrel.

By the way, in this week the crude oil of Gulf countries had also reached from 115 dollars per barrel to 96 dollars per barrel. Due to which the rupee also got a lot of support. On the other hand, foreign investors also made purchases in the stock market for a few days this week. The effect of which was also seen in the currency market. Let us also tell you how the rupee has appreciated against the dollar.

Rupee rises by Rs 1.33 against dollar

In the month of May, the rupee has seen an increase of Rs 1.33 against the dollar. If we look at the data, on the last trading day of last quarter, the rupee had closed at the level of 94.84 against the dollar. Whereas when the market closed on May 8, the figure had reached the level of 93.51. This means that the rupee has appreciated by Rs 1.33 i.e. 1.40 percent against the dollar. However, many reasons can be considered behind the rise in rupee. The biggest reason is the fall in crude oil prices and RBI intervention. There has been a significant decline in the price of crude oil in the last few days.

On the other hand, RBI has intervened in the currency market to control the rupee. There is a reason for this also. The rupee crossed the level of 95 against the dollar and reached a life time low. The special thing is that in these five trading days, a fall in the rupee was seen only on one day i.e. on May 4. After that the pace has continued steadily. An increase of 5 paise was seen on 5th May, 69 paise on 6th May and 27 paise on 7th May. This means that in 4 trading days an increase of 172 paise has been seen against the dollar.

On which day was the rise and which fall in the month of May?

Increase of 71 paise on Friday

On Friday, the rupee recovered from its fall and closed at 93.51 against the US dollar with a rise of 71 paise. Forex traders said investor sentiment was hit after Iran accused the US of breaking the ceasefire as the US carried out fresh strikes in the Strait of Hormuz and civilian areas, while President Donald Trump said the ceasefire was still in force. Brent oil prices, which had fallen to $98 a barrel amid the US-Iran peace deal, rose slightly to nearly $100 a barrel as investors assessed the prospects for a Middle East peace deal.

At the interbank forex market, the rupee opened at 94.58 against the US dollar, then slowed down and touched 94.68 against the US currency, registering a decline of 46 paise from its previous close. However, it recovered its fall and ended Friday's session at 93.51, an increase of 71 paise over its previous closing price. On Thursday, the rupee had closed at 94.22 against the US dollar with a rise of 27 paise.

Situation from crude oil to dollar

1. Meanwhile, the dollar index—which measures the dollar's strength against a basket of six currencies—was trading at 97.91, down 0.15 percent.
2. Global oil benchmark Brent crude was trading at US $ 99.81 per barrel, down 0.25 percent in futures trade.
3. Talking about the domestic stock market, Sensex fell 516.33 points to close at 77,328.19, while Nifty fell 150.50 points to 24,176.15.
4. According to exchange data, foreign institutional investors (FIIs) sold shares worth Rs 4,110.60 crore on Friday.
5. RBI said on Friday that during the week ending May 1, India's foreign exchange reserves declined by US $ 7.794 billion to US $ 690.693 billion.
6. In the previous week - which ended on April 24 - the total reserves had decreased by US $ 4.82 billion to US $ 698.487 billion.

What do experts say?

Mirae Asset Sharekhan Research Analyst Anuj Chaudhary said forex traders said risk aversion in global markets and weak domestic equities also weighed on the rupee. We expect the Rupee to trade with a slight downside bias amid new geopolitical tensions in the West Asia war. Improvement in crude oil prices and weak global markets can also put pressure on the rupee. Selling by foreign institutional investors may drag the rupee further down. However, we do not expect any major decline. Traders can also take cues from non-farm payroll data coming from the US. USD-INR spot price is expected to trade in the range of 94.10 to 94.90.

Saurabh Sharma

Covering stock market, economy and commodities for 15 years. Before joining TV9, he was also associated with many big organizations like DNA, A-Shiyanet, Jansatta and Rajasthan Patrika.

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