Rupee bounces 12 paise to end at 2-week high as crude oil ebbs

A sharp fall in global crude prices to the lowest level since mid-April along with upbeat domestic equities largely helped the recovery momentum.

Heavy dollar unwinding by speculative currency traders ahead of Federal Reserve Chairman Jerome Powell's first congressional testimony for any clues on the pace of US interest rate rises also had an impact on the trading sentiment.

The rupee resumed sharply higher at 68.40 against previous close of 68.57 at the Interbank Foreign Exchange (forex) market.

The local currency moved to an intra-day high of 68.27 but some dollar demand in afternoon session pushed back to a low of 68.47. It finally closed at 68.45, revealing a gain of 12 paise, or 0.18 per cent.

The home unit had ended 4 paise lower yesterday.

Oil prices had dropped by 4 per cent yesterday crude export terminals in Libya reopened and exports from other OPEC countries and Russia improved.

The Benchmark brent is trading at USD 72.01 a barrel in early Asian trade. After touching three-and-a-half-year highs at the beginning of the month, oil prices have fallen by almost 10 per cent over the last week on easing supply concerns.

"A slide in global crude oil prices could help India contain inflation, current account and fiscal deficits," Abhijeet Dey, Senior Fund Manager-Equities, BNP Paribas Mutual Fund said.

The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 68.2978 and for the euro at 80.1006.

The domestic bond market also staged a recovery and the 10-year benchmark yield dropped 5 bps to 7.75 per cent.

The dollar index, which measures the greenback's value against basket of six major currencies, was up at 94.39.

In the cross-currency trade, the rupee rebounded against the pound sterling to settle at 90.39 per pound from 91.09 and regained against the euro to finish at 80.16 as compared to 80.39 earlier.

The home unit also recouped against the Japanese yen to settle at 60.84 per 100 yens from 61.05 yesterday.

In forward market today, premium for dollar remained weak due to persistent receiving from exporters.

The benchmark six-month forward premium payable in November edged lower to 106.50-108.50 paise from 108.75-110.75 paise and the far-forward May 2019 contract also eased to 253.25-255.25 paise from 255.25-257.25 paise on Monday.