Rupee rebounds from life lows, up 33 paise at 69.82 verses USD

This is the biggest one-day vault against the American currency in seven weeks.

After a seemingly endless stream of gloomy news and falling values, sentiment has finally started to show signs of improvement globally against the backdrop of the upcoming visit of Chinese delegates to the US in order to re-engage in trade talks.

Easing contagion risk on emerging market currencies after last week's carnage also led to a positive influence on the trading front.

The recovery also coincides with the falling inflation levels despite widening trade deficit, which has risen to a near five-year high.

The Indian currency had its most turbulent week in more than two years witnessing record lows after doing little to quell investors' fears of a prolonged downturn ahead -- a shock resembling 2013 currency crisis.

The rupee crashed to a historic low of 70.40 before closing at a life-time low of 70.15 against the dollar in the wake of Turkey's currency crisis last week.

However, the upside was cushioned by hardening worries over fiscal slippage after the country's trade gap widened to a five-year high amid rising global crude prices.

The domestic currency touched a high of 69.59 in early deals.

Staging a smart recovery, the rupee opened with a gap up at 69.83 against last Thursday's close of 70.15 at the inter-bank foreign exchange (forex) market.

The fresh breakout pushed the rupee to hit a session's high of 69.59 as foreign banks sold the greenback. A strong rally in local equities further added momentum.

Easing trade tensions between the US and China also boosted most Asian currencies.

After revisiting a high of 69.59, the local unit finally ended the day at 69.82, revealing a sharp rise of 33 paise, or 0.47 per cent.

The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 69.7617 and for the euro at 79.6720.

The 10-year benchmark bond yield also eased to 7.84 per cent.

On the energy front, benchmark Brent oil stabilised near USD 72 per barrel on Monday after several weeks of decline, weighed down by concerns over slowing global economic growth but supported by an expected fall in supply from Iran due to US sanctions.

Meanwhile, country's forex reserves have declined by USD 25.147 billion between April 13 and August 10, with the rupee on a downward spiral since the beginning of the year forcing the Reserve Bank to sell dollars to defend the local currency.

The forex reserves plunged to a low of USD 400.88 billion in the week to August 10, losing a whopping USD 1.822 billion within a week, according to the latest to RBI data.

Foreign investors, however, pumped in over Rs 8,500 crore into the Indian capital markets following weakening crude oil prices and better corporate earnings.

Globally, the US dollar rebounded after a brief sell-off in anticipation of the US-China trade talks.

Against a basket of other currencies, the dollar index is up at 96.1.

In the cross-currency trade, the rupee bounced back against the euro to finish at 79.72 compared to 79.80 and also recovered against the Japanese yen to end at 63.15 per 100 yens from 63.28 earlier.

The home unit remained firm against the British pound and settled at 89.11 per pound from 89.12. 

Elsewhere, the euro retreated from early highs against the US dollar due to growing concerns over Italy's potential massive 80-billion-euro budget spending to upgrade the country's infrastructure as fallout from last week's collapse of Genoa bridge is exerting both a political and economic cost.

The British pound traded little changed against the greenback amid growing worries about a no-deal Brexit been weighing on Sterling for some time.

In forward market today, premium for dollar declined owing to mild receiving from exporters.

The benchmark six-month forward premium payable in December edged down to 106-108 paise from 107-109 paise and the far-forward June 2019 contract softened to 253-255 paise from 254.50-256.50 paise.