Rupee hits fresh 2-1/2 yr high on sliding US dollar
The rupee shot up to end at a nearly two-and-a-half year high of 63.48, surging by 20 paise against the US dollar as the bullish momentum continued strongly for the fourth-straight day driven by upbeat hopes on the macro front. An extremely bearish greenback sentiment has been one of the key factors driving the rupee higher at this juncture, reports the PTI. Besides, the heavy dollar unwinding by speculative traders and exporters further supported the day’s surge, the agency added. Tuesday’s close is the best closing for the home currency since July 17, 2015 when it had closed at 63.47. Abundant capital inflows on hopes of more reform measures along with robust domestic macro fundamentals strengthened the local currency. In a four-day rally, the rupee has appreciated by a whopping 67 paise against the American currency. The RBI, meanwhile, fixed the reference rate for the dollar at 63.6728 and for the euro at 76.5856. The 'feel good' factor and the relative political stability improved the perception about India's economi c growth prospects among foreign investors. Eight core sectors expanded at a fastest pace in more than a year at 6.8 per cent in November 2017 on account of robust performance in segments like refineries, steel and cement, official data showed overnight. The Indian economy has made significant headway and has grown at a stronger 6.3 per cent rate, year-on-year, in the second-quarter of 2017.
Globally, the US dollar languished near a three-month low against its major trading partners, as global markets reopened after a new year holiday. The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 91.53 in early trade. In cross-currency trades, the rupee fell back against the pound sterling to settle at 85.96 per pound from 85.91, and drifted sharply against the euro to finish at 76.61, compared to 76.40 on Monday. The home unit also declined against the Japanese yen, to close at 56.58 per 100 yens from 56.52 on Monday. “In the last few sessions [the] rupee has been strengthening primarily on [the] back of weakness in the dollar against its major crosses”, Navneet Damani, VP, Commodity Research, Motilal Oswal Commodities, told Mint. “Better-than expected economic numbers [are] also supporting the home currency”, Damani added.
The pound sterling continued to trade near a three-month high against the US dollar, though the advance was interrupted by softer-than-expected UK Markit manufacturing PMI data. The euro traded close to its highest level in three years against a broadly weaker US dollar.