The rupee on Wednesday shot up by a staggering 47 paise to close at nearly a three-and-a-half- month high of 53.30 on sustained dollar selling amid continued capital inflows, after RBI cut lending rate to boost growth.
Forex dealers said weakening of the US currency against the euro overseas and a recovery in local equities also favoured the rupee sentiment.
The local currency started the day at a firm note at 53.55 from yesterday’s close of 53.77 against the dollar at the Interbank Foreign Exchange (Forex) market.
It moved in a range of 53.28-53.60 before settling for the day at 53.30, a gain of 47 paise, or 0.87 per cent. Previously, rupee had ended at 52.87 on October 17, 2012.
“Rupee continued its upward movement today mainly buoyed by the rate cut by RBI, which has created some sense of optimism in the markets. Also, exporters are on a dollar selling spree as they are expecting this to be the peak for the local unit,” IDBI Head (Treasury) N S Venkatesh said.
The rupee had gained 14 paise yesterday, after RBI cut its short-term lending (repo) rate and cash reserve ratio by 0.25 per cent, pumping in a liquidity of Rs18,000 crore into the system.
Venkatesh said a recovery in local stocks and hopes of higher foreign fund inflows also aided the rupee, adding that it will strengthen to 52-level against dollar by March-end.
The dollar index was down by 0.24 per cent against a basket of six major currencies ahead of the policy announcement from US Federal and US growth data.
