The government on Thursday hiked the import duty on certain communication items.
Mumbai: Rising for the third straight day, the rupee strengthened by 55 paise to settle at 73.57 against the US dollar on Friday, marking its biggest gain in over three weeks as global crude prices eased and domestic indices staged a smart rebound.
Steps taken by the government to curb non-essential imports and anticipation of more measures to attract foreign inflows have boosted sentiment in the market, traders said. The government on Thursday hiked the import duty on certain communication items, including base stations, to up to 20 per cent as part of efforts to check a widening current account deficit and shore up the rupee.
At the Interbank Foreign Exchange (Forex), the rupee opened on a strong note at 73.84 from Thursday's close of 74.12. It gained further ground to hit a high of 73.52 against the US dollar, driven by selling of the greenback by exporters and banks and easing crude oil prices. The domestic unit finally settled for the day at 73.57, up by 55 paise. This is its biggest gain since September 19, when it had jumped 61 paise.
According to Rohit Srivastava, Fund Manager – PMS, Sharekhan by BNP Paribas, there is "expectations that the government will take action on the weak rupee". Forex dealers said bullish trend in the equity market as well as easing crude oil prices also supported the rupee's upward movement. Brent crude was trading at USD 80.65 per barrel.
The International Energy Agency on Friday revised lower its growth forecast for global oil demand for 2018 and 2019, citing high prices, trade tensions and a less favourable economic outlook. Meanwhile, the BSE Sensex Friday posted its biggest single-day gain in 19 months, soaring over 700 points, as global markets rebounded after two straight sessions of losses.
The BSE Sensex settled up by 732.43 points, or 2.15 per cent, at 34,733.58. The broader Nifty ended the week at 10,472.50, up 237.85 points, or 2.32 per cent. Foreign investors net sold shares worth Rs 1,322.13 crore Friday, provisional data showed.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the dollar at 73.7967 per dollar. The reference rate for euro was fixed at 85.5545 and for the British pound at 97.6537. The reference rate for 100 Japanese yen was 65.67.