Rupee on Tuesday rallied by 35 paise against the US dollar during morning trade following Monday’s recovery in equity markets on the back of Federal Reserve’s move to slash key lending rate to ease global credit crunch.
In volatile trade at the Interbank Foreign Exchange (forex) market, which remained closed yesterday, the local currency resumed strong at 41.12/14 a dollar from Friday’s close of 41.3250/3350 and later breached 41-level to touch a high of 40.97 in morning trade.
The rupee was quoted at 41.0450/0550 a dollar in late morning deals.
Citing reasons for the rupee’s surge, forex dealers said investors were seen selling dollars to re-leverage some of their yen-funded carry trades after the global equity markets bounced on Monday.
Rupee is expected to remain volatile during the day as traders may attempt to re-establish positions in higher-yielding currencies funded by the yen loans, they added.