Rupee rebounds from all-time low, rises 12 paise to 78.94/USD

In first two months of the current fiscal year, net tax receipts were 3.08 trillion rupees while total expenditure was 5.86 trillion rupees, the data showed.(Representative Image)

Snapping its five-session losing streak, the rupee rebounded from its lifetime low to close 12 paise higher at 78.94 against the US dollar on July 1 amid efforts by the government to curb gold imports and check the current account deficit.

The Centre on July 1 said it has hiked the gold import duty to 15 per cent from 10.75 percent amid an increase in the yellow metal’s imports, which is putting pressure on the current account deficit.

The duty change came into effect from June 30. At the interbank forex market, the rupee opened at 78.99 against the greenback and fell to an intra-day low of 79.12.

It finally settled at 78.94, a rise of 12 paise over its previous close of 79.06 — its lifetime low. "Today the government announced hike in import duty on gold by 5 per cent to curtail volatility of the rupee," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

According to Somaiya, USD-INR is likely to trade sideways but with a positive bias and quote in the range of 78.70 and 79.20. On the domestic equity market front, the BSE Sensex ended 111.01 points or 0.21 percent lower at 52,907.93, while the broader NSE Nifty declined 28.20 points or 0.18 per cent to 15,752.05.

The dollar index, which measures the greenback’s strength against a basket of six currencies, was up 0.30 per cent at 105. Brent Crude futures, the global oil benchmark, rose 1.79 per cent to USD 110.98 per barrel.

Foreign institutional investors remained net sellers in the capital market on Friday as they offloaded shares worth Rs 2,324.74 crore, as per stock exchange data. The recent decline in rupee has been roughly in line with other regional currencies, said Dilip Parmar, Research Analyst, HDFC Securities.

Rupee is likely to remain under pressure in the near future as long as outflows continue with tighter dollar liquidity, Parmar said, adding, "Spot USD-INR is having resistance at 79.30 and support at 78.70 with a bullish bias."