The rupee on Wednesday recuperated by 46 paise to close at an eight-week high of 64.95 against the US dollar on fresh selling of the American currency by banks and exporters on persistent foreign capital inflows into domestic equities.
Weakness of dollar in the overseas market also boosted the domestic currency, a forex dealer said.
The rupee on Wednesday opened higher at 65.29 per dollar as against yesterday’s level of 65.41 at the Interbank Foreign Exchange market and firmed up further to close at an 8-week high of 64.95, showing a gain of 46 paise or 0.70%.
“Among day’s major market moving events, Spot rates for Indian rupee against US dollar was seen trading close to Rs 65 per dollar in Wednesday’s trade after FII inflows kept the rupee stronger. The rupee is seen at these levels for the first time after 14th August,” said Hiren Dhakan, Associate Fund manager, Bonanza Portfolio.
The rupee had last ended at 64.78 per dollar on August 12, 2015.
It hovered in the range of 65.3650 to 64.9500 per dollar during the day.
The dollar index was traded lower by 0.04% in the late afternoon trade.
In Tokyo, the dollar was weaker against the yen in choppy Asia trade on Wednesday, with some speculative players disappointed to see the Bank of Japan’s decision to keep its monetary policy intact.
The dollar’s weakness underscores increasing expectations among some short-term players who built up positions in anticipation of monetary easing by the central bank Wednesday, given Japan’s darkening economic outlook and low inflation.
But the central bank’s inaction prompted some to unwind their speculative positions, putting downward pressure on the US currency.
The dollar index is also trading weak against the other major currencies which aided the rupee to trade positively for the day. The trading range for the Spot USD/INR pair is expected to be within 64.60 to 65.40.
In forward market on Wednesday, premium for dollar ended narrowly mixed due to uneven demand and supply of dollars.
The benchmark six-month premium payable in March eased to 204-206 paise from 205.5-207.5 paise while forward Sept 2016 inched up to 417-419 paise from 416.5-418.5 paise.
The RBI fixed the reference rate for the dollar at 65.2571 and for the Euro at 73.4664.
The rupee moved down against the pound sterling to finish at 99.41 from 99.17 yesterday while recovered against against the Euro to 73.13 from 73.38.
It also recouped against the Japanese currency to settle at 54.08 per 100 yen from 54.37.