Indian Rupee: Strengthens owing to dollar weakness overseas:2-Dec-2016

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Rupee strengthened against the dollar, extending gains for the fourth session on Friday, 02 December 2016 on continued selling of the American currency by banks and exporters. Dollar’s weakness against some currencies overseas led to the rupee upmove. However, a weak opening in domestic equity market restricted the gains in rupee.

The domestic currency opened at Rs 68.29 against the dollar but dipped to a low of 68.39 so far during the day. In the spot currency market, the Indian unit was last seen trading at 68.35. Yesterday, the domestic currency had gained 4 paise to end at one-week high of 68.34 against the resurgent dollar following robust macro-economic data even as crude prices jumped after the historic OPEC deal.

Domestic benchmark indices dropped in early trade on negative Asian stocks. At 9:22 IST, the barometer index, the S&P BSE Sensex, was down 175.10 points or 0.66 percent at 26,384.82. The Nifty 50 index was currently off 57.50 points or 0.7 percent at 8,135.40.

Overseas, Asian markets were trading lower on global uncertainties as investors adopted a wait-and-see mood. Later today, 2 December 2016, the US Labor Department will release its closely watched monthly employment report for November.

Investors are awaiting US payrolls report for confirmation the US economy continues to strengthen, with an eye on an expected hike in benchmark US interest rates by the Federal Reserve at its meeting on 13-14 December. Investors are also concerned about Italy’s constitutional referendum on Sunday, 4 December 2016 which could determine whether or not the country will remain in the euro zone.

Meanwhile, the dollar eased from a 9-1/2 month high against the yen on Friday, with investors cautious ahead of a looming U.S. jobs report that could set the market’s tone in coming days. The greenback was poised to end lower against a basket of currencies this week during which it gave up some of its recent robust gains.

The dollar index sagged 0.2 percent to 100.86, and was down 0.6 percent for the week. The dollar index had hit a 13-1/2-year high of 102.05 last week, having rallied as U.S. bond yields surged on expectations of higher fiscal spending and a faster pace of Fed monetary tightening under President-elect Donald Trump.

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