The Indian rupee rose nine paise to 75.56 against the US dollar in early trade on Monday, amid selling seen in the domestic equity market.
The rupee opened on a flat note at 75.63 per dollar as compared to Friday’s close of 75.64.
At 11:17 IST, the Nifty was down with 131.80 points or 1.27 per cent at 10251.20 while the Sensex was down with 428.59 points or 1.22 per cent at 34742.68.
According to Forex traders, insufficient domestic equities, foreign fund outflows, and skyrocketing coronavirus cases weighed on investor’s sentiments. However, the weak American dollar strengthened the local unit and restricted the decline.
Rahul Gupta the Head of Research- Currency, Emkay Global Financial Services, explained that the global equity market is reacting to new stimulus packages and the unconventional easing and is trading higher amid rising coronavirus cases. But, there is a lot of uncertainty about the hike in COVID-19 cases. Meanwhile, the market is trying to figure out what the impact of COVID-19 on consumer activity in upcoming months, and it remains unclear now because no one knows how bad this spike is going to get.
“Foreign Institutional Investor (FII) inflows into local stocks have dragged the USD/INR spot again towards 75.50 zones. So, we expect it further to trade between 75-76 in the coming days until the Indo-China border tension escalates,” he added.
Meanwhile, the oil prices fell for a second straight session on Monday as COVID-19 cases rose in the United States and other places of the world, forcing countries to resume partial lockdowns that could further decrease the fuel demand.
ICICIdirect said, the Indian rupee has been finding support near 75.50 levels and witnessed some up move amid weakness in the equities. We believe that immediate support for the rupee is around 75.40 while it should be bought on declines.
The dollar-rupee contract during the last session on the NSE stood at 75.80. The open interest increased almost 7 per cent in July series during settlement, ICICIdirect further added.