The Indian rupee made gains for the third consecutive day on Thursday, as both the US and Iran seem to be downplaying the recent escalation in the tensions after the former killed top Iranian commander Qasem Soleimani.
On Thursday, the rupee was the best-performing currency in the emerging markets and second-best performing currency across the world. The domestic currency, during the day’s trade, gained 48 paise (0.67%) to close at 71.21 against the US dollar. The only other currency which performed better than Indian currency against the greenback was Korean Wong — which gained 1% during the day’s trade.
On Wednesday, the domestic currency made a smart recovery. In the first hour of the morning trade, the rupee had lost 27 paise as news of Iran launching ballistic missile strikes on US bases in Iraq started pouring in. However, as both sides downplayed the strikes, the rupee started gaining and ended the day with 13 paise gain.
During the three trading sessions, starting from Tuesday, the rupee has gained 72 paise (1.03%) against the US dollar, despite foreign funds pulling out their monies from the Indian markets. The foreign funds, in the past three trading sessions, have pulled out a net of Rs 1,629.19 crore from the Indian equities.
The startling recovery of the rupee has happened purely on the back of the global crude oil prices moderating strongly in the past few trading sessions, according to the analysts. The Brent Crude futures in the international markets are down by 7.3% after testing $70.74 level last Friday. At the time of filing this copy, the Brent futures were trading at $65.53 a barrel.
However, the surge in the rupee prices seems to have hit the companies whose primary revenues come from the exports — like IT. BSE’s Information Technology Index went down by 17.83 points to 15,676 points, despite markets witnessing the broad index level rally on Thursday. “IT was the only loser as rupee rose after crude oil prices fell 5% overnight,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.