The rupee continued to outshine against the beleaguered US dollar and ended at a nearly 3-month high of 67.22, appreciating by 9 paise on sustained unwinding of American currency by exporters and corporates ahead of the RBI policy.
Heavy unwinding of long dollar positions built by speculative traders last week ahead of FOMC meet predominantly gave the rupee a boost amid extreme weak overseas sentiment.
Expectations of robust capital inflows against the backdrop of improving macro-economic environment alongside aggressive policy reforms in the Union Budget further supported by upmove.
India remains the best emerging market growth stories, largely outperforming its Asian peers.
In the Union Budget presentation, the government pegged fiscal deficit at 3.2 per cent of the GDP for fiscal 2017-18, lower than market expectations.
Moreover, the RBI is seen cutting rates by 25 bps, in the face of easing inflationary pressure aided by fiscally prudent budget, in its February monetary policy meeting on Wednesday.
Domestic equities, too, reacted positively to the budget announcements last week.
The greenback has been under immense pressure amid growing concern about the potential impact of the Trump Administration’s protectionist stance.
Pushing its strong rallying momentum on track for a ninth-straight day – its longest in recent past, the home unit has appreciated by a whopping 98 paise against the dollar.
Foreign funds and overseas investors continued their portfolio buying spree and infused USD 292.38 million during the past week, triggering a stunning rally in local equities.
The rupee resumed on a strong footing at 67.20 from last Friday’s close of 67.31 at the Interbank Foreign Exchange (forex) market and maintained its highly bullish wave to hit an intra-day high of 67.1475 in late afternoon deals.
It gave back some initial gains towards the tail-end trade before ending at 67.22, showing a good gain of 9 paise, or 0.13 per cent. The rupee had seen this level on November 11 last year.
The US dollar index was trading firmly higher at 99.97 in late afternoon session.
The RBI fixed the reference rate for the dollar at 67.1958 and for the euro at 72.4035.
In cross-currency trade, the rupee maintained its upbeat trend against the British pound to end at 83.77 from 83.94 per pound and strengthened further against the euro to settle at 72.15 from 72.25 previously.
But, it fell back against the Japanese Yen to close at 59.80 per 100 yens from 59.50 earlier.
Meanwhile, country’s foreign exchange assets, which are a major component of the overall reserves rose by USD 782.7 million to USD 361.557 billion in the week to January 27.
In the previous week, the reserves had surged by USD 932.4 million to USD 360.775 billion.
On the domestic equity front, bourses staged a spectacular rally as across the board frantic buying led key indices to fresh multi-month high amid hopes of interest rate cut from the RBI at the upcoming monetary policy meet.
The benchmark Sensex jumped 198.76 points to finish at 28,439.28, while broader Nifty rose 60.10 points to 8,801.05.
In the forward market, premium for dollar continued to slide owing to sustained receivings from exporters.
The benchmark six-month premium for July moved down to 147.75-149.75 paise from 149-151 paise and the far-forward January 2018 contract also slipped to 290-292 paise from 291-293 paise last Friday.
Crude prices continued to surge after US announced new sanctions against Iran last Friday following After Iran’s missile test, raising geopolitical tensions between the two nations.
Source: financialexpress.com