Mumbai: The rupee today strengthened by 45 paise to close at a one-month high of 55.07 against the US currency tracking a jump in local shares triggered by Finance Minister P Chidambaram’s promise of bringing the economy back on track.
Persistent dollar selling by exporters and some banks, increased capital inflows and weak dollar overseas also kept the rupee rally upbeat as it marched upward for the third straight day, said forex traders.
At the Interbank Foreign Exchange (Forex) market, the rupee resumed higher at 55.32 a dollar from its overnight close of 55.52. The rupee later moved in a range 55.51 and 55.06 before ending at 55.07, showing a rise of 45 paise or 0.81 per cent.
This is the highest closing for the rupee since it had settled at 54.97 on July 5.
The new Finance Minister yesterday unveiled a roadmap to prop up the country’s economic growth, helping the stock market benchmark Sensex to gain nearly 189 points while FIIs pumped in over Rs 800 crore into local stocks.
“The rupee took cue from the Euro and other Asian currencies, which were trading higher against dollar. The statement from Finance Minister regarding solution of tax issues and investor friendly regime supported rupee,” Hemal Doshi, Currency Strategist, Geojit Comtrade.
Dealers said robust capital inflows helped the rupee hold to gains. Foreign Institutional Investors (FIIs) have so far bought shares worth over USD 10 billion in this calendar year.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: “The assurance of the FM to fine tune the reformative process to attract larger dollar inflows…Aided rupee”.
Experts said with the dollar index was down by 0.16 per cent against six major rivals, the sentiment helped rupee.
Going ahead, if rupee breaches 54.70-80 level, then it may appreciates to 54.20 level in the next few trading sessions, they added.