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HomeBusinessRupee marks biggest gain in one year on strong foreign inflows

Rupee marks biggest gain in one year on strong foreign inflows

The Indian rupee recorded its largest one-day gain against the US dollar in a year today amid a strong recovery in domestic equities. The partially convertible rupee rose 0.6% to 79.45 per US dollar in its best session in a year. The currency ended Monday at 79.96 after hitting a record high of 80.12. India’s Sensex stock market index rose more than 1,500 points today as investors returned to buy the dips after a recent sell-off.

According to NSE data, FIIs bought Indian shares worth 4,165 crore on a net basis today.

Domestic stocks saw foreign investor inflows of about $6 billion in August, the highest since December 2020. The dollar index lost some steam today after its 20-year high in the previous session.

“The rupee rose strongly by 40 paise as heavy short coverage was observed in FII’s capital markets. As the benchmark rose 2.50% in the Indian capital markets, going through 80.00 will continue to be a strong support for the rupee, while 79, 00 will be tested in the upcoming session,” said Jateen Trivedi, VP Research Analyst at LKP Securities.

Hitesh Jain, Lead Analyst – Institutional Equities, YES SECURITIES, said that while the rupee bias remains on the downside, he sees a major downside as RBI remains committed to keeping the INR in a narrow range. “Needless to say, RBI’s war chest in terms of sufficient FX reserves to counteract volatility in INR. Also, FII flows to equities remain positive, as markets will take courage from an looming opportunity to include Indian bonds in global indices,” he added.

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Indian government bond yields fell Tuesday as sentiment was bolstered by expectations of progress toward bond listing in global indices.

The benchmark yield on 10-year government bonds ended at 7.1893%, from 7.2534% on Monday. Yields fell 13 bps in August, after falling 13 bps in July.

In the previous session, the rupee depreciated 7 paise to close at 79.91 against the US dollar. The rupee fell to its all-time low of 80.15 against the US dollar in intraday trading.

Goldman Sachs had said earlier this month that it expects India to be included in global bond indices by 2023, potentially leading to passive inflows of about $30 billion.

(with desk entrances)

This story was published from a news agency feed with no text changes.

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