MUMBAI: Tracking the trend in domestic stocks, the rupee surged stronger by 152 paise or 3.08 per cent to a five-month high of 47.88/89 against the dollar on hopes of heavy capital inflows, prompted by a clear mandate for the Congress-led UPA in the Lok Sabha elections.
The domestic currency breached the 48-level and touched this level not seen since December 19, 2008.
The inter-bank foreign exchange market witnessed fairly active trading as the domestic equity markets hit the upper circuit filter, leading to suspension of trading twice after the election mandate generated euphoric conditions in Indian markets.
The Indian unit moved between 47.75 and 48.65 after resuming with a wide gap of 92 paise at 48.48/52 from its previous close of 49.40/42.
Forex dealers said the exchange market was in an upbeat mood with strong indications of heavy portfolio investments, which analysts estimated at about $50 billion through foreign direct investment (FDI), external commercial borrowing (ECB) and equity.
The government is expected to push forward the reforms agenda paving the way for increased capital inflows, the prime driver for the rupee.
Reference rate
The Reserve Bank of India (RBI) fixed the reference rate for the U.S. dollar at Rs. 48.17 and for the single European currency, euro, at Rs. 64.81.
Rupee premiums on the forward dollar closed sharply lower on sustained receivings from exporters.
In cross-currency deals, the rupee firmed sharply against the British pound sterling, the euro and the Japanese yen.
Source : The Hindu