Rupee in recovery mode ahead of GDP data, jumps 43 paise

Forex market sentiment swung back in favour of the domestic currency after the initial wave of volatility on the back of easing political uncertainty in Italy and expectations of robust GDP growth.

Besides, massive unwinding of long dollar positions by exporters and corporates also lifted the overall trading mood.

A sharp US dollar retracement slide, despite a goodish pickup in the US treasury bond yields ahead of key US growth and employment data, also supported the recovery momentum.

The government will release gross domestic product (GDP) data for the March quarter and 2017-18 fiscal tomorrow.

India's GDP had expanded by 7.2 per cent in the third quarter and regained the status of the world's fastest-growing major economy in the October-December quarter.

India's economy is back on track at this juncture and expected to gradually rise with continued implementation of major structural reforms, a forex dealer said.

Meanwhile, crude prices climbed to USD 76 a barrel, largely due to tight supplies despite expectations that OPEC and its allies will pump more in the second half of 2018.

Global benchmark Brent crude has dropped almost by USD 5 from a 3-1/2-year high of USD 80.50 a barrel on May 17, after reports that OPEC and Russia may increase supply at a June meeting.

Brent crude futures, an international benchmark, was trading up at USD 76.08 a barrel, in early Asian trade.

The Indian unit opened flat with negative bias 67.87 against Tuesday's close of 67.86 at the interbank foreign exchange (forex) market, largely weighed down by sustained capital outflows and weak local equities.

After falling as low as 67.91 in mid-morning deals, the rupee managed to bounce back to hit session's high of 67.42, before ending at 67.43, showing a smart gain of 43 paise, or 0.63 per cent.

It has now reversed all previous session's downfall.

The RBI, meanwhile, fixed the reference rate for the dollar at 67.6288 and for the euro at 78.1992.

The dollar index, which measures the greenback's value against a basket of six major currencies was up at 94.27.

In the cross currency trade, the rupee also recovered against the pound sterling to end at 89.24 per pound from 89.85 and bounced back against the Japanese yen to finish at 61.92 per 100 yens from 62.31 earlier.

The rupee, however, dropped against the euro to close at 78.43 as compared to 78.39 yesterday.

Elsewhere, the common currency euro rebounded from its 10-month low as German retail sales rise above expectations ahead of key inflation data and also drawing support from stabilising Italian bond markets despite looming political uncertainty.

The British pound also bounced back in tandem with Euro amid persistent uncertainty surrounding impending Brexit talks, against the backdrop of recent dovish BoE tilt.

In forward market today, the premium for dollar continued to fall owing to sustained receiving from exporters.

The benchmark six-month forward premium payable in September slipped to 85.50-86.50 paise from 86-88 paise and the far-forward February 2019 contract eased to 219.50-221 paise from 220-222 paise previously.