Rupee appreciates as foreign banks sell dollar

Ends at 68.63 a dollar, up from previous close of 68.71; in intraday, it had fallen to 68.79 a dollar

The Indian rupee appreciated sharply at the end of the market hours as foreign banks cut their long positions on dollar ahead of the Union Budget.

“There was a lot of (dollar) selling by the foreign banks at the end of the market hours after positive US data and the Economic Survey,” said a currency dealer at a foreign bank.

The Economic Survey indicated the government could meet its fiscal-deficit target but economic growth could remain stagnant. Meanwhile, US fourth-quarter economic growth data grew one per cent, as against expected 0.4 per cent, making the US markets rally. The Indian rupee closed at 68.63 a dollar, up from its previous close of 68.71 a dollar. Intraday, rupee fell to 68.79 a dollar. The dollar index was down 0.02 per cent against a basket of six currencies in late afternoon trade.

The dollar was lower against the yen and the euro during Asia trade on Friday, as investors wait for a gathering of the world’s finance officials over the weekend in China.

Market sentiment recovered as US stocks and oil prices gained overnight. Oil prices rose after Venezuela's oil minister said the country would meet with Russia, Saudi Arabia and Qatar on efforts to stabilize oil markets.

Data released by the central bank showed foreign exchange reserves fell $1.466 billion to $350.36 billion. RBI has been selling dollars in the market to stabilise the rupee that recently traded at a record low of 68.95 a dollar in the one month forwards segment in the overseas NDF market.