Rupee at 17-month high

Mumbai, March 27: Scripting its second biggest single-day gain this year, the rupee on Monday zoomed by 37 paise to close at a fresh 17-month high of 65.04 on the back of panic dollar selling by speculative traders and exporters.

This is the highest closing for the domestic unit since October 28, 2015 when it had closed at 64.93. Expectations of more reforms that will boost long-term economic growth reinforced investor optimism including the much awaited labour, agricultural and banking reforms.

Robust capital inflows and weakness of the dollar against other currencies overseas predominantly boosted the rupee value against the dollar, a forex dealer said.

Foreign investors have pumped in about $6 billion in capital markets so far this month, buoyed by expectations that BJP’s victory in assembly polls is a precursor to more “bold, reformist policies” in India.

Heightened volatility in greenback characterised foreign exchange market sentiment following the failed passage of the US healthcare reform through the US Congress last weekend.

However, worries of policy gridlock and the possible knock-on effects of that sent global financial markets into a tailspin which expect a radical pro-growth agenda.

Domestic equities couldn’t find the magic and endured a massive sell-off on the back of profit-taking across the spectrum as investors preferred to remain cautious ahead of F&O expiry amid lack of support from global peers.

The currency resumed on a firm footing at 65.27 from last Friday’s closing value of 65.41 at the Interbank Forex market.

The forex and money market will remain closed on Tuesday.