Indian Rupee: Weak Dollar To Support

Indian Rupee: Weak Dollar To Support

May 07, 2021 09:05 IST capital market

Dollar weakness overseas alongside faith shown by foreign investors in the domestic equity market is likely to keep rupee supported in opening trades. However, dollar movement, eyeing crucial jobs data would provide further direction for the local currency. Nevertheless, persistently high coronavirus cases in the country continue to dampen investor sentiments.

On Thursday, rupee strengthened by 13 paise to settle at 73.78 against the US dollar. At the interbank forex market, the local unit opened at 73.87 against the greenback and witnessed an intra-day high of 73.77 and a low of 74. It finally ended at 73.78 against the American currency, registering a rise of 13 paise.

Domestic equity indices ended with decent gains on Thursday, tracking positive global shares. US President Joe Bidens decision to waive intellectual property rights on vaccines boosted global stock markets. The S&P BSE Sensex, added 272.21 points or 0.56% to 48,949.76. The Nifty 50 index gained 106.95 points or 0.73% to 14,724.80. Foreign portfolio investors (FPIs) bought shares worth Rs 1,222.58 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 632.51 crore in the Indian equity market on 6 May, provisional data showed.

Overseas, Asian stocks broadly advanced Friday ahead of the U.S. jobs report due later in the day that might provide some indication on what the Fed could do next. Investors will be looking ahead to the U.S. nonfarm payroll count for April due Friday. The International Monetary Fund said on Thursday the recent jump in COVID-19 cases in India posed downside risks to the Funds April forecast for 12.5% growth in Indias economic output in fiscal years 2021 and 2022. The IMF will revisit that forecast when it issues a fresh World Economic Outlook in July, as per reports.

In US, the Dow Jones Industrial Average closed at a record high on Thursday, bolstered by an upbeat weekly jobless claims report, while vaccine makers dipped after U.S. President Joe Biden backed plans to waive patents on COVID-19 shots. The Bank of England said on Thursday it would slow the pace of its bond-buying as it sharply increased its forecast for Britains economic growth this year after its coronavirus slump. The BoE kept its benchmark interest rate at an all-time low of 0.1% and the size of its bond-buying programme unchanged at 895 billion pounds ($1.24 trillion).

Meanwhile, the dollars index against six other major currencies stood near its lowest level so far this week, at 90.87. The dollar continued to stay under modest pressure on Friday ahead of a key U.S. jobs report that could cement expectations of a strong economic recovery and fan investor appetite for stocks, higher-yielding currencies and commodities. However, US jobless rate slid to 498,000 in the week ended May 1st, a decrease of 92,000 from the previous weeks revised level of 590,000, the Labor Department reported. With the much bigger than expected decrease, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

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