Rupee catches up with equity surge

Written by Press Trust of India | Mumbai | Updated: Jun 29 2013, 05:46am hrs
In tune with surge in stocks, the rupee rose by a staggering 80 paise, its biggest single-day gain in last nine months, to close above the 60-mark at 59.39 amid signs of strong fund inflows on hopes that US Fed will not begin tapering monetary stimulus soon.

Forex dealers said sustained dollar selling by exporters tracking weakness in the US currency overseas also boosted the rupee. The rupee commenced at 59.95 a dollar as against previous close of 60.19 at the Interbank Foreign Exchange (Forex) market and immediately touched a low of 60.02. Later, it rebounded sharply and rallied to a high of 59.21 before settling at 59.39, revealing a rise of 80 paise, or 1.33%. This is rupees biggest single-day gain since September 21, 2012, when it had gained 93 paise, or 1.71%.

Pulling back of rupee was mainly driven by sentiment after the announcement of gas price hike

and formation of a coal regulator among others by the government.

Also, markets expectation of improved scenario on CAD front on the back of falling gold prices and lesser buying of the yellow metal supported the currency, said Hemal Doshi, currency strategist at Geojit Comtrade. He also said rupee may pull back more from the current level if RBI and government come up with more measures. Foreign institutional investors pumped in a massive R1,124.31 crore into domestic equities, according to BSE provisional data.