Indian rupee opened higher and traded near a 2-month high against the US dollar on Wednesday on easing worries over current account deficit after crude oil prices plunged 7 percent overnight.
At 09:10 AM, the rupee was trading at 72.03 a dollar, up 64 paise from its Tuesday’s close of 72.67. It has appreciated to 72 level for the first time since September 21. The home currency opened at 72.16 and touched a high and a low of 71.99 and 72.19 a dollar, respectively.
Oil markets fell by more than 7 percent the previous day. They have lost over a quarter of their value since early October in what has become one of the biggest declines since prices collapsed in 2014.
India imports nearly 80 percent of its total oil needs and a fall in price would drive down the value of its imports. A fall in oil prices by $10 per barrel helps reduce the current account deficit by $9.2 billion, according to market experts.
Besides, fund inflows by foreign investors and the US dollar’s weakness against some currencies overseas also supported the domestic unit.
The dollar index, a gauge of its value versus six major peers traded at 97.03 on Wednesday, down 0.28 percent. The index hit a 16-month high of 97.69 on Monday.
Foreign institutional investors (FIIs) bought shares worth Rs 832.15 crore Monday, provisional data showed.
The rupee is the worst performing emerging market currency having lost almost 15 percent since January this year. Between April and September the rupee has plummeted more than 7 percent to the dollar.
In debt markets, the yields on the 10-year government bonds fell 0.7 percent to 7.71 percent after closing at 7.76 percent on Tuesday. Bond yields and prices move in opposite directions.
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