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Rupee rises for 2nd straight day; settles up 10 paise at 70.34 vs USD

Thursday, May 16, 2019

The rupee yesterday appreciated by 10 paise to close at 70.34 against the US dollar, marking the second straight session of gain driven by easing crude prices, while the Reserve Bank's plan to conduct open market operation also buoyed investor sentiment.

The rupee opened strong at 70.32 and later rose to the day's high of 70.17 at the interbank forex market. During the day the local unit touched an intra-day low of 70.39 against the US dollar.

The domestic currency finally settled at 70.34, higher by 10 paise from the previous close. The rupee Tuesday had recovered 7 paise to close at 70.44 to the US dollar.

Forex traders said the rupee strengthened after the RBI announced a plan to conduct the open market operation. On the other hand, heavy selling in
domestic equities and foreign fund outflows restricted its gains.

"Bond yields fell for the third session after Reserve Bank of India announced plans to conduct more open-market operations," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.

"Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct purchase of ... Government securities under Open Market Operations for an aggregate amount of Rs 12,500 crore on May 16, 2019, through multi-security auction using the multiple price method," the RBI said in a release.

Meanwhile, the Dollar Index which gauges the greenback's strength against a basket of six currencies, rose 0.04 per cent to 97.56.

"The dollar is trading higher supported by comments from senior Federal Reserve officials playing down the likelihood of interest rate cuts, and by a fresh bout of safe-haven buying on geopolitical tensions," Sharma said.

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