Rupee scales 3-week high of 64.93 on encouraging macro data

The rupee continued its stellar run against the US dollar for the fifth day, surging by 15 paise to end at a fresh three-week high of 64.93 on easing macro worries coupled with record-setting domestic equities.

A combination of factors such as bullish macro economic situation and easing monetary policy environment amid favouring global factors predominantly kept forex market mood buoyant.

Macro data released on Thursday sent out a positive signal about bottoming out in the economy after the recent phase of downtrend to hit a three-year low in the June quarter amid receding investor pessimism.

To enhance the government's reform credentials, the industrial production grew at a nine-month high of 4.3 per cent in August on account of robust performance of mining and power sectors coupled with higher capital goods output, while retail inflation came in at 3.28 per cent in September, unchanged from August.

The buoyancy reflects the country's attractiveness among global investors due to strong fundamentals allying growth concerns, a forex dealer commented.

The Indian economy is expected to recover in the current quarter as the slowdown seen post demonetisation has ended, he added.

This is the highest closing for the home currency since September 21.

Meanwhile, pre-Diwali fireworks continued unabated on the domestic bourses as frantic buying across the board driven by gush of liquidity and expectations for the RBI to cut key rates due to better-than expected inflation data propelled the Nifty to end at a life time high of 10,167, surging over 71 points.

The flagship Sensex also shot up 250 points to finish at an over two-month high of 32,432.69.

After a spectacular start at 64.95 against yesterday's close of 65.08, the rupee maintained its overall strength as trading progressed at the Interbank Foreign Exchange (forex) market on heavy dollar unwinding.

It kept momentum going to hit a fresh intra-day high of 64.87, but came off from day's high against the dollar in afternoon trading, as importers stepped up greenback purchases.

The local unit finally settled at 64.93, showing a smart gain of 15 paise, or 0.23 per cent.

For the week, the Indian unit has appreciated by a good 45 paise against the greenback after four-straight weekly downfall.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.9301 and for the euro at 76.8772.

In cross-currency trades, the rupee retreated against the pound sterling to end at 86.30 from 85.54 per pound but remained firm against the Japanese yen to finish at 57.88 per 100 yens from 57.97.

The local currency also recovered against the euro to conclude at 76.74 from 77.17 yesterday.

On the global front, the US dollar held steady near two-week lows against other major counterparts, as investors remained cautious ahead of a highly-anticipated US inflation report due later in the day.

The greenback had broadly strengthened after the US Department of Labor reported on Thursday that initial jobless claims fell more than expected to 2,43,000 last week.

The dollar index, which measures the greenback's value against a basket of six major currencies, was trading sharply lower at 92.66 in early trade.

Elsewhere, the euro traded little changed after its sharp overnight rally as investors focused on US CPI and retail sales data during the US session.

The pound strengthened further on rumours indicating that the EU is willing to grant the UK a 2-year transition period.

In forward market today, premium for dollar weakened further due to sustained receiving from exporters.

The benchmark six-month premium payable in March softened to 122-124 paise from 123-125 paise and the far forward September 2018 contract moved down to 259.50-261.50 paise from 261-263 paise.

On the international energy front, crude prices staged a smart rebound on Friday as strong Chinese oil import data and turmoil in the Middle East boosted bulls in a market that has already shown signs of re-balancing after years of excess.

The brent was at USD 57.23 in early Asian trade, up 98 cents, while US West Texas Intermediate (WTI) crude was at USD 51.41 per barrel, up 81 cents from its last settlement.