The rupee was trading strong by 48 paise at 64.12 at 4.13 p.m. local time on dollar selling by banks and exporters.
The domestic unit gained 30 paise to 64.30 per dollar in the opening session against the previous close of 64.60.
Yesterday, the domestic unit had hit a life-time low of 65.65 against the dollar in intra-day trade. It has fallen over 21 per cent since May and about 9 per cent in August.
The rupee sentiment was boosted after Finance Minister P. Chidambaram sought to assuage investors asserting that there is no need for “excessive and unwarranted pessimism''.
Also, weakening of the dollar against some currencies overseas and RBI Governor D. Subbarao assuring that the central bank has adequate foreign exchange reserves to deal with the declining value of rupee boosted the currency, forex dealers said.
Sugandha Sachdeva, Assistant Vice-President, Currency Research, Religare Securities, said: “The capital control measures taken by RBI further heightened the fears of uncertainty in the forex market. Moreover, increasing gold imports are creating more fears of widening CAD.”
According to the World Gold Council report, India’s gold demand at 566 tonnes jumped 50 per cent year-on-year in the first half of FY’13. In addition, the country topped in gold consumption during the second quarter, which is adding to the worries.
“However, the fall is too steep and these high levels of rupee are unsustainable. Government’s measures to reduce capital controls and imports and infusion of foreign investment should support the rupee. We expect the rupee to appreciate to 63.50 levels in 10-15 days,” Sachdeva added.
