The Reserve Bank of India’s (RBI’s) recent moves to attract dollar inflows and hopes of a diplomatic solution in Syria boosted sentiments with both the rupee and the Sensex continuing with their northward journeys.
While the rupee gained for the fifth straight session, appreciating 46 paise to close at 63.38 against the US dollar, the Sensex also ended in the positive zone.
The Indian currency was also boosted by capital inflows and dollar sales by exporters. The RBI on Tuesday allowed swap facility for term deposits of lenders and relaxed norms for banks to borrow funds from overseas.
US President Barack Obama said he would pursue diplomatic efforts to remove Syria’s chemical weapons, in signs that the possibility of a military strike is fading.
The rupee opened at 63.9 a dollar from its previous close of 63.8 and rose to a three-week intra-day high of 63.0 before settling at 63.4, a rise of 46 paise or 0.7%. In the last five sessions, the rupee has gained 425 paise or 6.3%.
“The expectation that the Syrian crisis might not develop into a war has led to the reduction in the safe-haven demand in US dollar and Japanese yen. All emerging nations currencies are benefiting,” said Abhishek Goenka, CEO, India Forex Advisors.
It was a volatile day for the market as the Sensex witnessed a 278 points swing between the day’s high of 20,055 and the low of 19,778. It ended at 19,998, a marginal 0.4-point gain.