The rupee reached its highest in more than a year reaching amid persistent rise in foreign investment inflow and a weakening dollar in the global currency market.
The domestic currency closed at 46.14 per dollar after reaching an intra-day high of 46.08 on Wednesday.
“The rise in rupee is a result of the combination of factors such as flow into equities, external commercial borrowings (ECBs), FDI and trade credit along with weak current account flows as the imports are weak,” said Abheek Barua, chief economist, HDFC Bank.
A stronger rupee, however, could bring bad news for embattled exporters who are struggling to ink new orders from the two of India’s largest export markets—the USA and the European Union.
The rupee has rise by more than 11 per cent since March 2009, when it hit a low of 52.08 to a dollar.
Experts feel speculators have been also playing into the market and so further appreciation is limited. “I expect rupee to weaken from here and expect RBI to step in now,” said Jamal Mecklai, CEO, Mecklai Financial Services. Close to Rs 70,000 crore has been pumped by foreign institutional investors into Indian equities since March ’09.