The Reserve Bank of India on Wednesday bought dollars from the foreign exchange market to prevent a sharp appreciation of the rupee against the dollar.
The rupee rallied to an eight-month high of 60.07 following sustained foreign fund inflows into the domestic equity market, but dollar purchases by the RBI prevented the currency from gaining much further and the currency still closed 34 paise higher at an eight-month high of 60.14.
According to forex traders, the RBI is suspected to have bought nearly $1 billion and swapped it in the forwards market. The rupee resumed strong at 60.28 from the last close of 60.48 and improved to a high of 60.07 before settling at 60.14, its highest closing since July 29, 2013, when it had concluded at 59.41. The local currency has gained 120 paise or 1.96 per cent in four straight days of trading.
Heavy foreign inflows ahead of the general elections have strengthened the rupee in the last couple of days. Foreign investors have pumped over $9 billion into India this year. While heavy foreign buying has sent domestic shares to record highs, with net purchases reaching a $3.1 billion so far this year, net inflows into the debt market stand at $5.85 billion.
Sensex, Nifty hit new peaks
Mumbai: Domestic stocks rallied further on Wednesday, sending Sensex and Nifty to their record highs amid heavy foreign capital inflows and expectations of a stable government after elections.
With foreign investors on a buying spree, Sensex and NSE Nifty rose to their lifetime closing high of 22,095.30 and 6,601.40 points, respectively. The Sensex opened on a strong note and rose to historical peak of 22,172.10 points intra-day. It, however, lost some momentum and settled the day at 22,095.30 by gaining 40.09 points or 0.18 per cent.
The NSE Nifty, comprising 50 shares, firmed up by 11.65 points or 0.18 per cent to close above 6,600 level for the first time at 6,601.40 points. The broader index touched intra-trade high of 6,627.45 points. ENS
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