Enthused by budgetary proposals to boost exports, the rupee on Monday strengthened for the second day by rising 20 paise to end at 68.42 per dollar on sustained selling of the American currency by banks and exporters.
Finance minister Arun Jaitley on Monday said that more support will be provided to exporters to give a boost to overseas shipments.
“The duty drawback scheme has been widened and deepened to include more products and countries. The government will continue to take measures to support the export sector,” Jaitley said in his Budget speech for 2016-17.
Under the scheme, the government refunds duties on imported inputs for export items.
The rupee resumed lower at 68.69 from last Friday’s closing level of 68.62 at the Interbank Foreign Exchange (Forex) market in Mumbai on Monday and dropped further to 68.75 per dollar on initial month-end dollar demand from importers, mainly oil refiners.
However, it recovered from earlier losses and firmed up to 68.35 on selling of dollars from banks and exporters in view of lower dollar in the overseas market and recovery in the domestic equity, before closing at 68.42, showing a gain of 20 paise or 0.29%.
It has gained by 30 paise or 0.44% in two days.
The domestic currency hovered in a range of 68.35 and 68.75 per dollar during the day.
Meanwhile, the dollar index was up by 0.09% against a basket of six currencies in late afternoon trade.
The yen was stronger against rival currencies during the late Asian trade, as market sentiment was low after experts voiced concerns about rising downside risks and vulnerabilities in the global economy at their weekend Group of 20 meeting in Shanghai.
Top financial officials from G-20 economies said in their official communique issued Saturday that “excess volatility and disorderly movements in exchange rates” are a risk for economies and financial stability. The G-20 officials also reaffirmed they would “refrain from competitive devaluations” of their exchange rates.
Pramit Brahmbhatt of Veracity Financial Services said,” The rupee opened on a considerable weaker note near 68.7 levels. But on back of RBI intervention, rupee recovered considerable to higher levels. Equity market had been quite volatile, as we witness recovery of 270 points from low point of the day and NIFTY closed with a loss of 43 points. A smart recovery from low point helped rupee to gain considerable.
Thus, the rupee closed stronger with a gain of 20 paisa at 68.42 levels. Trading range for spot USD/INR pair is expected to be within 68 to 68.80 levels.
The benchmark Sensex ended lower by 152.30 or 0.66%.
In forward market, premium for dollar declined on sustained receivings from exporters.
The benchmark six-month premium July dropped to 187-189 paise from 194-196 paise on last Friday and far forward January 2017 contract also fell to 401-403 paise from 413-415 paise.
The RBI fixed the reference rate for the dollar at 68.6160 and for the euro at 76.0796.
In cross-currency trades, the rupee rose against the pound sterling to finish to 94.86 from the last weekend’s level of 95.75 and also moved up against the euro to 74.50 from 75.59 previously.
The domestic unit moved up further against yen to finish at 60.61 per 100 yen from 60.78.