Rupee jumps 26 paise against dollar on GDP growth revival forecast

The Indian rupee on Friday surged by 26 paise to end at 71.32 against the US dollar, buoyed by the Economic Survey projecting a revival in economic growth next fiscal.

At the interbank foreign exchange market, the local currency opened at 71.46. During the day, it saw a high of 71.28 and a low of 71.52. The domestic unit finally settled at 71.32, up 26 paise over its previous close.

The rupee had settled at 71.58 against the American currency on Thursday.

The Economic Survey 2019-20 has pegged GDP to grow at 6-6.5 per cent in 2020-21, up from 5 per cent in the current fiscal.

Meanwhile, the global crude benchmark Brent futures rose 0.69 per cent to trade at USD 58.69 per barrel.

However, crude prices had seen some moderation in the past few sessions over demand slump amid rising coronavirus cases in China and other regions.

"Brent crude continued to remain under pressure and trades around five month low. Lower crude is supporting Indian rupee to cap its losses against the dollar," said V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.

After the Economic Survey, all eyes will be on Saturday's Union Budget, which is expected to set the tone for the forex as well as stock market going ahead.

Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, said, "Rupee started the day on strong note near 71.45, and continued its strength towards 71.32 on back of Economic survey projections of 6-6.5 per cent growth rate in coming fiscal year where as FY20 GDP seen at 5 per cent. Global market face uncertainly over China's Corono virus which can lead to slowdown."

Chief Economic Adviser K V Subramanian said the Indian economy has bottomed out and it will see an uptick from here.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.03 per cent to 97.84.

The 10-year Indian government bond yield was at 6.60 per cent.

On the domestic equity market front, the 30-share BSE Sensex closed 190.33 points, or 0.47 per cent, lower at 40,723.49. Likewise, the broader NSE Nifty shed 73.70 points, or 0.61 per cent, to finish at 11,962.10.

"Expectation is that the Finance Minister could make changes in the fiscal deficit target for the next financial year and that could keep the rupee weighed down. On the domestic front, GDP number will be released today and weaker-than-expected number could the currency under pressure. In the next couple of session the USDINR (Spot) to quote in the range of 71.20 and 71.80," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Foreign institutional investors sold equities worth Rs 4,179.12 crore on a net basis on Friday, according to provisional exchange data.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.4772 and for rupee/euro at 78.7102. The reference rate for rupee/British pound was fixed at 93.0209 and for rupee/100 Japanese yen at 65.62.