Rupee appreciates for fifth straight day, ends at seven-month high

The rupee ended at a level above the Rs 61 per dollar mark at Rs 60.84 compared with Friday's close of Rs 61.09 per dollar

The rupee appreciated for a fifth straight trading session, ending at a seven-month high on Monday, on the back of heavy dollar flows into both equities and debts. Besides, dollar sale by companies also helped the domestic currency gain against the greenback.

At 60.84, the rupee ended above the 61-mark, compared with Friday’s close of 61.09 to the dollar. The rupee had ended at 60.81 against the dollar on August 6. It opened weaker at 61.26 and during the early trade session, touched a low of 61.34.

“The recovery in the rupee was due to dollar flows in domestic markets from foreign institutional investors (FIIs) as well as dollar sale by information technology companies and other corporates,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai. During intra-day trades, the rupee touched a high of 60.79. Since August 28, when the rupee touched an all-time low of 68.85 to the dollar, it has gained by over 11 per cent. The appreciation spree is also supported by the fact that current account deficit narrowed to a fresh four-year low, as gold imports cooled. The deficit was $4.2 billion in the October-December quarter, compared with $5.2 billion for the previous  quarter.

“The appreciation is mainly because of custodian flows and buoyancy created by the capital markets going up. The strengthening may continue up to end-March and the movement of the rupee might start becoming range-bound after that, as election results will be awaited. At some point of time if there is an opportunity to build foreign exchange reserves, the Reserve Bank of India may perhaps do so,” said Mohan Shenoi, president, group treasury and global markets, Kotak Mahindra Bank.

Finance Minister P. Chidambaram said on Friday that he expects CAD to come in below $40 billion from $45 billion estimate in interim budget.

RBI's foreign exchange reserves rose by $ 954.6 million for the week ending February 28 to $ 294.36 billion, shows data released on Friday.