INR tracked consecutive gains to touch a high of 75.04 at around 14:40 UTC. Rupee registered a surge of 45 paise during the session with positive cues from Domestic financial market. After opening higher against US Dollar, the Rupee traded between a low of 75.49 and high of 75.04 marking high gains.
Drop in the value of US Dollar index by 0.28% to USD 97.57 against a basket of other currencies supported Rupee. Also, a declaration by Indian PM to bring back GDP growth and economic reforms helped raise investors’ sentiments. Weak US economy and Government’s steps to reopen the domestic economy further helped Rupee gain grounds against the US Dollar.
Crude Price Rises Marking Positive Cues
Crude oil prices rise with positive expectations from major oil producers to increase production cuts which supports the high price. Further, Brent crude oil surge by 2.3% to USD 39.20 per barrel. The US WTI crude rose 2% to USD 36.16 per barrel. Increase in crude prices may weaken INR in the long run.
Crude prices have doubled after a significant price drop with massive support from production cuts by OPEC+ with cuts extending to 9.7 million BPD. A video conference meeting is scheduled this week to discuss further the extension of production cuts that may help crude prices to surge. But, the rates have been capped by the trade war between the US and China. Crude oil prices still are down by 40% as tracked before the breakout of COVID-19 for the financial year 2020-2021.
Gold Price Closes Flat
Pressure on gold eased as the domestic equity market gained momentum to settle flat. Spot gold dropped by 0.2% to USD 1736.92 an ounce after hitting the highest since 21st May. US gold futures lay flat at USD 1750. SPDR gold trust holdings gained 0.5% touching 1128.40 tonnes, tracking highest in 7 years. Fall in Gold prices may significantly impact USD/INR.
Gold price gains are capped as equity market rebounds to reach high after the announcement by Government to reopen the domestic economy in a phased manner. Global markets also experience a surge leaving back the fear of Coronavirus spread. Trade tension between US-China and rapid increase in Coronavirus cases can support gold prices in the near future. Indian gold imports dipped almost 99% this year as spot gold market remains closed due to the spread of Coronavirus.