Rupee rises by 56 paise to 3-month high, settles at 75.04 against dollar

Sensex settles 429.25 points higher at 35,843.70, Nifty ends 121.65 points up to close at 10,551.70

MUMBAI: The rupee surged by 56 paise to close at more than three-month high of 75.04 against the US dollar on Thursday tracking weakness in the greenback and gains in domestic equities amid optimism over potential COVID-19 vaccine. Forex traders said investors turned to riskier currencies and assets after Pfizer reported encouraging vaccine test results.

The rupee opened at 75.51 against the US dollar and gained further ground to touch a day’s high of 74.99. The local unit settled at 75.04 against the US dollar, up 56 paise over its previous close. This is the highest closing level since March 27 when the rupee had settled at 74.89.

It had settled at 75.60 against the greenback on Wednesday.

The rupee logged its “biggest single-day gain since April 23, boosted by gains in the domestic equity market amid weakness in the greenback”, Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities said.

“Market participants also expected dollar inflows while state-run banks remained on the sideline. Moreover, investor sentiment strengthened further after Pfizer reported encouraging vaccine test results,” he said. The first of four experimental COVID-19 vaccines being tested by Pfizer and its German partner Biontech showed encouraging results in very early testing of 45 people, the companies said on Wednesday. The number of cases around the world linked to COVID-19 has crossed 1.06 crore and the death toll has topped 5.16 lakh. In India, the death toll due the disease rose to 17,834 and the number of infections spiked to 6,04,641, according to the health ministry.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.26 per cent to 96.94. The BSE Sensex settled 429.25 points, or 1.21 per cent, higher at 35,843.70.

The NSE Nifty surged 121.65 points, or 1.17 per cent, to close at 10,551.70.

Foreign institutional investors were net sellers in the capital market as they sold shares worth Rs 1,696.45 crore on Wednesday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 1.40 per cent to USD 42.62 per barrel.

Going ahead short-term trend is now clear with spot USDINR falling below 75.50 levels. “We expect rupee could head towards 74.50 in coming days,” Vakil said.

“Rupee ended strongly up on Thursday on strong inflows into local stocks even as upbeat economic data from the US diminished safe-haven appeal of dollar,” Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities said.