The rupee pared some gains, but still managed to close at a 20-month high of 64.12 per dollar on Wednesday following a rally in global markets which was sparked by a Centrist victory in the first round of the French presidential polls. Intra-day, the rupee breached 64-mark to rise to 63.93 against the US currency.
The rupee on Wednesday gained 0.24% from Tuesday’s close of 64.28.
Robust foreign inflows into stocks and debt pushed the rupee higher, with custodian banks selling dollars on behalf of their foreign clients. Heavy dollar selling by Indian corporates, especially around 64.14-15 levels, helped the rupee strengthen further, traders said.
Foreign portfolio investors have bought Indian equity and debt worth about $3.4 billion so far this fiscal.
“A strong global sentiment is pushing the rupee higher, and as long as the positive sentiment continues, the rupee will gain. A crucial technical zone is 63.80-63.60 per dollar. We will have to see if the rupee finds some resistance here. If this level is broken, it can go much higher,” said Ashutosh Raina, head of forex trading at HDFC Bank.
Strong corporate earning in the US and prospects of corporate tax cut for American companies, coupled with political stability in France after Emmanuel Marcon won the first round of vote in the presidential elections caused the global rally.
The Sensex touched a record high of 30,167.09 points on the back of the rally in the global markets, before closing at 30,133.35, up 0.63% from the previous close.
Traders said the rupee could strengthen as far as 63.25 per dollar in the near-term before there is a reversal.
On Wednesday, the Reserve Bank of India was seen buying dollars at 63.95-97 levels, traders said, adding that the central bank’s intervention would be crucial for the rupee’s movement. “The intervention today was not very strong. Going forward, we do not see the RBI aggressively intervening in the way it did earlier,” a senior forex trader with a state-run bank said.
The dollar index, a measure of the greenback’s performance against major currencies, was around 99.08 points. It has been trading below 100 points since April 17.
The one-month offshore non-deliverable forward contracts were at Rs 64.39 per dollar, weaker than the onshore spot rate, while the three-month non-deliverable forward contracts were at Rs 64.81 per dollar.