Rupee Strengthens Against Dollar Amid Investor Caution After EU Poll

The Indian rupee strengthened against the dollar on Tuesday amid investor caution due to the results of the European elections.

The local currency opened 2 paise stronger against the US dollar at 83.49, according to Bloomberg. It had closed at 83.51 on Monday.

The US dollar index was at 105.38 in comparison to 105.15 in the previous session. The US 10-year yields fell to 4.449%. Brent oil prices rose to $81.57 per barrel.

The foreign institutional investors resumed buying, pouring in Rs 2,578 crore during the last session. Anticipated inflows, including Reliance Infrastructure raising $350 million, SpiceJet planning to raise $250 million and Clix Capital aiming to raise $600 million is likely to benefit the rupee, according to Amit Pabari, managing director at CR Forex Advisors.

The euro-dollar pair traded heavily on the defensive due to political concerns from far-right parties gaining electoral majority in countries like France, Germany and Austria in the European parliamentary elections on Sunday.

“Concerns about far-right parties gaining momentum pushed financial markets into risk-averse mode, boosting demand for the safe-haven US dollar,” Kunal Sodhani, vice president of Shinhan Bank, said.

“For USDINR, 83.40 acts as a support while 83.60 a resistance,” Sodhani said.