Rupee rises 18 paise against the US dollar

NEW DELHI: Snapping a two-day losing streak, the rupee rose by 18 paise to 66.75 in early trade on Wednesday, as Asian currencies recovered amid reports that the Chinese central bank, PBoC, was intervening to support the tumbling yuan.

The domestic currency had declined by 11 paise to close at a three-week low of 66.93 against the greenback in the previous session on persistent dollar demand from banks and importers.

A spate of weak economic releases in China and lower guidance rate for yuan by the People’s Bank of China in the past eight consecutive days had triggered concerns over a slowdown in China and the dependent economies.

However, on Friday, the midpoint rate was set at 6.5636 to the dollar, which was firmer than the previous fix of 6.5646 and the previous day's closing quote 6.5929. Asian currencies rebounded. The yuan was last trading 0.42 per cent higher at 6.5655.

The Malaysian ringgit rose 1 per cent to 4.35 against the US dollar. The Taiwan dollar and the Korean won advanced 0.81 per cent and 0.72 per cent, respectively. The Indonesian rupiah rose 0.51 per cent. The Singapore dollar gained .36 per cent.

Asian currencies have fallen up to 1.6 per cent this calendar. “The rupee has been a relative outperformer amid the damage that currencies across Asia and the world over have suffered. I think it is clearly linked to our fundamentals. The reason the commodity-producing countries are taking a big hit is obvious. It's the commodity crash. And that is precisely the reason why India should be benefiting,” said K Harihar, FirstRand Bank.

“Oil has breached the $35 a barrel barrier; $30 is in sight now. India will continue to be a big beneficiary of this fall. Depending on how you calculate, we should save $50 to $60 billion in a full year. So those who have a pessimistic outlook on the rupee should keep in mind that India will continue to be a big beneficiary in terms of lower trade deficit,” Harihar added.