Crude price increase: Rupee holds ground

#dailynews60 : The rupee jumped 33 paise in day trade before closing flat at 70.83 to the US dollar on Friday as surging crude oil prices after reports of a US-China trade deal knocked off sharp gains.

The rupee opened strong at 70.54 and surged further by 33 paise to touch the day’s high of 70.50 to the US dollar, mirroring sharp gains in stock markets.

Equity benchmark BSE Sensex breached the 41,000 level as the US and China reportedly reaching a trade deal and Boris Johnson’s win in the UK general elections boosted the market sentiment.

However, crude oil prices also gained more than 1 per cent to USD 65.19 per barrel on trade certainty which hit the rupee sentiment in afternoon trade.

The rupee finally settled unchanged at 70.83 against the US dollar.

President Donald Trump on Thursday tweeted that the United States is “VERY close” to a trade deal with China, days before new tariffs are due to take effect.

Reports also suggested that Trump had signed off on a pact between the US and China that will lead to the cancellation of impending US tariffs and the rolling back of previous duties.

Unlike the rupee, the Chinese yuan soared 1 per cent and the South Korean won and South African rand rose by 1.5 per cent each against the dollar. Australian dollar, the Indonesian rupiah, Mexican peso and Russian ruble also gained on strengthened sentiment.

Meanwhile, the British pound jumped to an 18-month high against the US dollar after the election triumph for Conservative Prime Minister Boris Johnson who would push for the UK’s scheduled exit from the EU, ending three years of uncertainty and political deadlock.

Foreign institutional investors (FIIs) bought shares worth Rs 115 crore on net basis on Friday, according to provisional exchange data.

The 10-year government bond yield was also flat at 6.78 per cent.

Brent crude futures, the global oil benchmark, rose over 1 per cent to trade at USD 65.19 per barrel.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.64 per cent to 96.77.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.7494 and for rupee/euro at 78.8101. The reference rate for rupee/British pound was fixed at 93.4651 and for rupee/100 Japanese yen at 65.15.