The rupee ended marginally higher by 2 paise at 66.59 against the US dollar on mild selling of the American currency by exporters and banks. The domestic unit resumed higher at 66.54 as against the last Friday’s closing of 66.61 at the Inter-bank Foreign Exchange (Forex) market and strengthened further to 66.45 on sustained bouts of dollar selling.
However, the uptrend was restricted due to the dollar’s strength against other major currencies overseas and gave away most of its early gains before ending at 66.59, showing a rise of 2 paise, or 0.03 per cent.
The domestic currency hovered in a range of 66.60 and 66.45 during the day.
The rupee had staged a resounding comeback to close higher by a whopping 24 paise at 66.61 on last Friday.
There is an expectation in the market that the RBI may go for a rate cut in its bi-monthly policy meet tomorrow after a decline in retail inflation in August to 5.05 per cent. The central bank had cut interest rate by 25 bps in its April review.
This will be the first meeting under new RBI governor Urjit Patel backed by the recently formed Monetary Policy Committee (MPC).
On the global front, the greenback traded firmly higher against the other major currencies on the back of upbeat US marco-economic data.
The dollar index was trading up by 0.08 per cent at 95.46 as against a basket of six currencies in late afternoon trade.
The RBI today fixed the reference rate for the dollar at 66.5330 and euro at 74.7166.
In cross-currency trades, the rupee gained further ground against the pound sterling to settle at 85.70 as compared to 86.41 and also firmed up further against the Japanese yen to finish at 65.70 from 65.83 per 100 yens.
It, however fell back against the euro to end at 74.81 from the weekend level of 74.40.
In the meantime, country’s foreign exchange reserves increased by $ 1.166 billion to reach $ 370.766 billion for the week to September 23.
Fiscal deficit in the first five months of the current fiscal stood at Rs 4.08 lakh crore, which was 76.4 per cent of Budget estimates for 2016-17, the government data showed last Friday.