Re rises to 2-week high in tandem with stocks

In sync with the stock market, the rupee on Friday soared by 30 paise to close at two-week high levels of 55.36 against the dollar on the back of capital inflows after the European Central Bank’s announcement to buy bonds.

At the Interbank Foreign Exchange (forex) market, the rupee resumed higher at 55.54 a dollar from the overnight close of 55.66 and immediately touched a low of 55.63. Fund flows worth Rs 500 crore in stocks and sustained dollar selling by exporters turned the sentiment in favour of rupee and it bounced back to remain in positive terrain throughout the day. It touched a high of 55.35 before concluding at 55.36, a rise of 30 paise or 0.54 per cent. The rupee also tracked gains in pound sterling which on Friday hit a three-and-half-month high against the dollar.

Yesterday, the rupee had risen by 25 paise or 0.45 per cent ahead of ECB’s meeting in Frankfurt, where it announced a potentially unlimited bond buying plan that soothed the frayed nerves of investors who feared a collapse of the Euro. The dollar index, consisting of six major global units, however was down 0.3 per cent on Friday while New York crude oil was quoting above $96 a barrel in Europe.

Pramit Brahmbhatt, chief executive officer, Alpari Financial Services (India), said, “The rupee extended the gains on liquidity enriched global markets, which pushed the dollar index below the 81 levels hitting towards the multi-month low. After the ECB’s new plan, global markets are running high on the hopes of a positive non-farm payrolls numbers from the US.” The market euphoria, however, is expected to calm down soon and the $/rupee is likely to be more dependent on domestic cues, said Indranil Pan, chief economist, Kotak Mahindra Bank.

“The rupee was seen gaining after breaching the mark of 56 levels yesterday. Tracking sharp gains in the euro and falling dollar, the rupee closed on a positive note on Friday,” Abhishek Goenka, founder and CEO, India Forex Advisors, said.