In tune with surge in stocks,the rupee today rose by a staggering 80 paise,its biggest single- day gain in last nine months,to close above the 60-mark at 59.39 amid signs of strong fund inflows on hopes that US Fed will not begin tapering monetary stimulus soon.
Forex dealers said sustained dollar selling by exporters tracking weakness in the US currency overseas also boosted the rupee.
The rupee commenced at 59.95 a dollar as against previous close of 60.19 at the Interbank Foreign Exchange (Forex) market and immediately touched a low of 60.02.
Later,it rebounded sharply and rallied to a high of 59.21 before settling at 59.39,revealing a rise of 80 paise,or 1.33 per cent. This is rupee’s biggest single-day gain since September 21,2012,when it had gained 93 paise,or 1.71 per cent.
“Pulling back of rupee today was mainly driven by sentiment after the announcement of gas price hike and formation of a coal regulator among others by the government.
“Also,market’s expectation of improved scenario on CAD front on the back of falling gold prices and lesser buying of the yellow metal supported the currency,” said Hemal Doshi,currency strategist at Geojit Comtrade.
He also said rupee may pull back more from the current level if RBI and government come up with more measures.
Foreign institutional investors pumped in a massive Rs 1,124.31 crore into domestic equities today,according to BSE provisional data.
The BSE benchmark Sensex today zoomed by 520 points,or 2.75 per cent,to end at 19,395.81 on rally refinery counters.
The dollar index was down by 0.05 per cent against other major rivals as three US Federal Reserve officials yesterday indicated investors had overreacted to recent remarks by Fed Chairman Ben Bernanke signalling tapering of bond purchases.
Pramit Brahmbhatt,CEO,Alpari Financial Services (India) said: “Trading range for the spot rupee is expected to be within 59.10-59.70.”
“Rupee continued to trade strong against dollar for the second consecutive day taking cues from strong local equity markets which closed up by 2.75 per cent.
“Rupee appreciated by over 1.50 percent during the day as the Dollar index which measures the greenback against a basket of six other major currencies is trading low and is heading towards the monthly loss,” Brahmbhatt said.
Meanwhile,premium for forward dollar remained weak on sustained receipts by exporters.
Benchmark six-month forward dollar premium payable in November declined to 143-145 paise from Thursday’s close of 147-149 paise. Far-forward contracts maturing in May also dropped to 312-314 paise from 318-320 paise.
“Today was a strong positive day for the rupee. The recent CAD figures along with yesterday’s RBI norms on currency bets by the FIIs have contributed for the appreciation in the rupee. Technically,rupee looks to be in the correction mode and is likely to appreciate against the US dollar in the next week,” said Abhishek Goenka,Founder and CEO,India Forex Advisors.
RBI fixed the reference rate for the US dollar at 59.6995 and for the euro at 77.9760.
Rupee bounced back with a vengeance against the pound sterling to 90.54 from previous close of 92.05 and also shot up further against the euro to 77.62 from 78.48.
It flared up against the Japanese yen to 59.97 per 100 yen from last close of 61.37.