Rupee vs Dollar: The Indian rupee, which is facing constant pressure, got some relief on Tuesday. Amid fall in crude oil prices in the international market, the rupee strengthened by 21 paise to reach 88.56 per dollar. However, withdrawal of foreign capital and strengthening of the dollar still remain a challenge for the rupee.

Why did the rupee strengthen?

Dilip Parmar, Senior Chief Analyst, HDFC Securities, said that on Monday, the rupee was under pressure from the weakness of regional currencies and foreign dollar withdrawal, but due to the intervention of RBI, the situation calmed down to some extent. On Tuesday, fall in crude oil prices and signs of some improvement supported the rupee.

The rupee opened at 88.55 per dollar in the interbank foreign exchange market. It touched 88.56 per dollar in early deals – an increase of 21 paise over its previous close. On Monday, the rupee had closed at 88.77 per dollar.

movement of dollar and crude oil

The dollar index (the position of the dollar against six major currencies) rose by 0.04% to 99.75. Brent crude (the international standard) is trading 0.32% lower at $ 64.68 per barrel. This fall in crude oil is a relief for India because the country imports about 85% of its oil needs.

BSE Sensex fell 55 points to 83,923.48 and NSE Nifty fell 40.95 points to 25,722.40. FIIs (foreign institutional investors) made a net sale of shares worth Rs 1,883.78 crore on Monday. According to analysts, major economic data like ISM Manufacturing and Non-Manufacturing PMI are going to come from America this week, which will decide the sentiment of global markets and the direction of currency exchange rates.

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India services PMI: India’s service sector has demonstrated a record -breaking demonstration in August and its speed has reached a 15 -year highest level. This bounce was mainly possible due to a rapid increase in new orders and production. The HSBC India Services Purchasing Manager Index (PMI) data released in a private survey conducted by S&P Global.

According to the report, seasonally adjusted HSBC India Seva PMI rose from 60.5 in July to 62.9 in August. This is the fastest speed of expansion since June 2010. The survey states that significant improvement in demand and strengthening of new orders brought out the activities of services to a high level of 15 years.

Strength in demand and order

More than 50 points on the scale of PMI means that business activities are expanding, while less than 50 points indicate contractions. Reaching PMI 62.9 in August shows that the service sector is expanding very fast.

According to HSBC India Chief Economist Pranjul Bhandari, “The growth rate of services is at a 15 -year high and the increase in the new order has strengthened it.” However, he also added that the inflation rate on the price front has reached a 9 -month high, due to which inflation also remains pressure.

Composite PMI jump

Meanwhile, the joint index of both services and manufacturing composite PMI also increased from 61.1 in July to 63.2 in August. This is the fastest growth of 17 years. This means that not only services but also the manufacturing sector in India is performing strong and the two together are taking overall economic activities to a new height.

The index has been prepared by S&P Global on the basis of survey of about 400 service sector companies and is given weightage in the ratio of India’s GDP (GDP).

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