Rupee loses initial gains to settles low again falling off the 76.00 level. Amid the rising border tension with China, Rupee fell to 76.12 at around 12:30 UTC against the previous close at 75.98. It loses 14 paise during the session marking negative investors’ sentiments.
At the interbank exchange, Rupee traded between a high of 75.80 and low of 76.26 before settling low. Massive outflow of foreign funds, Rapid rising of Coronavirus cases and border tensions with China accumulated to lower the sentiments dragging Rupee to fall. US Dollar index with greenback’s strength fell by 0.11% to 99.60 after the Fed announced specific measures to induce liquidity in the economy.
USD/INR – Crude Price Recovers with Demand Expectations
Crude oil prices surge today after IEA forecasted a rise in 2020 oil demand and excellent support from production cuts. Brent crude oil crosses USD 40 mark rising 1.94% to USD 40.49 per barrel. The US WTI crude increases by 1.64% to USD 37.73 per barrel. Rising crude prices forced Rupee to close low.
A monthly report published today by International Energy Agency forecasted crude demand at 91.7 million BPD in 2020. It surpasses its report with a rise by 500000 BPD published in May. They also released a statement on OPEC+ for the decline in the production by 9.4 million BPD. It states that OPEC+ are complying to 89% of agreed output cuts for May. But, concerns over lockdown restrictions and 2nd wave of Coronavirus weighed on the market. IEA warned if demand drops due to COVID-19, there will be no recovery to normal levels before 2022.
USD/INR – Gold Prices Surge with Positivity in the Market
Gold prices rise today with support from the Fed’s announcement to revive the economy. Spot Gold price increases by 0.3% to USD 1729.05 an ounce after dropping more than 1% in the previous session. US Gold futures gained 0.6% to USD 1737 after losing in yesterday’s session. Analysts suggest gold prices to cross USD 1800 mark in 2nd half of 2020 with a rise in liquidity by Banks.
US Federal Reserve announces that it would buy corporate bonds from the secondary market, which will boost interest in the equity market. Other Central banks are taking measures to revive economies, supporting gold to aim higher. Bank of Japan expects to induce 110 trillion yen in the marketplace through lending facilities and market operations. Gold benefits from stimulus measures taken by Central banks as it is used as a hedge against inflation and currency depreciation.
In the domestic financial market, gold futures gained 0.32% to INR 47176 per 10 grams with rising cases of Coronavirus cases. Also, a risk of 2nd wave of Coronavirus would support gold reach high levels.