The Indian rupee recovered marginally on Friday, February 21, 2014 tracking gains in most other Asian currencies. Besides increased dollar selling by exporters, a higher opening of the domestic equity market helped rupee to trade a marginally higher but the US currency’s strength against other currencies overseas capped the gains to some extent. The domestic currency opened up by 5 paise at Rs 62.18 against the US dollar and climbed to a high of 62.09 so far during the day. In the spot currency market, the Indian unit was last seen trading at 62.14, stronger by 9 paise or 0.14% as compared to previous close at 62.23.
Rupee recovered after hitting a one-week low on Thursday as dollar sales by custodian banks aided, but losses in domestic shares and regional peers after minutes from the U.S. Federal Reserve meeting showed it would stick to its tapering schedule prevented further gains. International Monetary Fund (IMF) yesterday, said in a report that India should prepare a plan to respond to volatility in global currency markets that may come as the US Federal Reserve reduces stimulus.
Domestic benchmark indices edged higher in early trade as firmness in Asian stocks boosted sentiment. Asian stocks rose on Friday after a larger-than-forecast climb in a measure of US manufacturing in February tempered concern about global growth. Foreign institutional investors (FIIs) bought Indian shares worth a net Rs 206.46 crore on Thursday, 20 February 2014, as per provisional data from the stock exchanges. At the time of writing, the S&P BSE Sensex was up 118.13 points or 0.58% to 20,654.77 while the CNX Nifty was up 35.15 points or 0.58% to 6,126.60.
In the global currency market, the dollar pulled away from a seven-week low against the euro and pushed higher against the yen in early Asian trade, bolstered by upbeat US economic data. The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.312, up 0.03% from the previous close of 80.286.