Rupee jumps to one-month high on strong RBI macro view
The rupee staged a solid recovery against the US dollar Tuesday by rising 16 paise to end at 67.02, its highest highest level in a month, on heavy selling of the greenback by exporters and banks.
Mumbai: The rupee staged a solid recovery against the US dollar Tuesday by rising 16 paise to end at 67.02, its highest highest level in a month, on heavy selling of the greenback by exporters and banks.
A massive rally in domestic equities along with smooth supply of dollars on the back sustained capital inflows into equities and debt predominantly helped the upmove.
Bullish comments from RBI that near-term outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 percent in 2016-17, further bolstered sentiment, a forex dealer said.
The gross domestic product (GDP) data for the June quarter and fiscal deficit data for July will be released tomorrow.
In the meantime, the US dollar maintained its bullish momentum to hit a two-week high against other major trading counterparts on buoyant expectations of a Federal Reserve rate rise in the midst of hawkish comments from Fed chair Janet Yellen.
The home currency opened higher at 67.13 from yesterday's closing value of 67.18 at the Interbank Foreign Exchange (forex) market and continued its ascend to close with a solid 16 paise gain, or 0.24 percent at 67.02 - the level not seen since July 29 this year.
It had lost 12 paise to close at near one-week low of 67.18 yesterday against the dollar.
The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.25 percent at 95.78 in early trade.
Meanwhile, foreign portfolio investors (FPIs) bought shares worth a net Rs 286.52 crore yesterday, as per provisional data released by the stock exchanges.
The RBI fixed the reference rate for the dollar at 67.0879 and euro at 74.9439.
In cross-currency trade, the rupee strengthened further against the euro to end at 74.84 from 75.04 and also firmed up against the Japanese yen to finish at 65.48 compared to 65.73 per 100 yens.
However, the home unit held virtually steady against the pound sterling at 87.83.
Meanwhile, Indian financial markets witnessed a massive buying spree amid a global rally, lifting key benchmark indices to multi-month high.
The benchmark BSE Sensex zoomed 440.35 points to end at 28,343.01 while the broader Nifty soared 136.90 points to close at 8,744.35.
In the forward market, premium for dollar showed easy to modestly firm trend.
The benchmark six-month premium for January softened to 163-165 paise from 163.5-165.5 paise, while the forward July 2017 contract inched up to 355-357 paise from 354.5-356.5 paise yesterday.
Crude prices edged higher today supported by production suspensions in the US Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will act to prop up prices.