Mumbai: The Rupee bounced back by 61 paise to close at over one-week high of 54.28 against the Green back during the week under review following bullish domestic equities amid fresh dollar selling by exporters and some banks.
Continued capital inflows too boosted rupee sentiment, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the local unit commenced lower at 55.03 a dollar against last weekend's close of 54.89 and declined further to a low of 55.15 on early dollar demand from importers and some weakness in local stocks.
It, however, later recovered and remained in positive terrain for the most of the week to touch a high of 54.27 before settling the week at 54.28, showing a net rise of 61 paise or 1.11 percent. In last week, it had tumbled by 72 paise or 1.33 percent.
Forex dealers attributed the recovery in the rupee value to buoyant local equities amid fresh dollar selling by some banks and exporters.
Hopes of more foreign funds inflow due to disinvestment in the state-run Rashtriya Chemical Fertilizers (RCF) in the week also supported the rupee. The government sold a 12.5 percent stake in the company through an auction of shares to raise about USD 57 million.
The Indian benchmark broke its long 5-week of losing string and flared up by 764.71 points or 4.04 percent, biggest weekly gains since last week of November 2012 while FIIs infused USD 323.40 million in the first four days of the week, as per Sebi data.
Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," Rupee traded strong throughout the week and appreciated by over one percent against the dollar, mainly taking cues from the positive equity market. Indian equity markets traded strong on the last trading day also and closed the week up by over 4.0 percent which aided Rupee further.
RBI rate cut on March 19 or firmer industrial output data due next week may give confidence that the growth cycle is turning."
"European stock markets rose to their highest since the 2008 financial crisis on Wednesday, while the Dow Jones Industrial Average hit a closing record high on Tuesday as investors turned their attention to riskier assets like equities, weighing on the dollar and ultimately helping the rupee rise. Recommended to sell rupee on rise as overall it is expected to depreciate," he added.
The benchmark six-month forward dollar premium payable in August closed the week at 180-1/2-182-1/2 paise.
Far-forward contracts maturing in February ended at 338-1/2-340-1/2 paise.
The RBI fixed the reference rate for the US dollar at 54.4035 and for euro at 71.2385 as against the last weekend's level of 54.4815 and 71.2736.
The rupee shot up further against the pound sterling to 81.58 from preceding weekend's level of 82.50, while recovered against the euro to close at 71.22 from previous weekend's level of 71.55.
It also bounced back sharply against the Japanese yen to finish at 56.72 per 100 yen from last weekend's level of 59.09.