Rupee appreciates for second straight day ahead of US Fed's policy meet

The rupee rose for a second consecutive session on Wednesday, due to dollar sales by corporates and foreign banks. Positive sentiments in the market also helped the rupee. There are expectations in the Street that National Democratic Alliance may outright majority.

The rupee ended at Rs 60.34 compared with previous close of Rs 60.43 per dollar. The rupee had opened at Rs 60.36 and during intra-day trades it touched a high of Rs 60.27 per dollar.

"There were dollar sale by corporates and foreign banks. The supply of dollars in the market was much more than the demand. There are also expectations in the market that NDA may win with majority," said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

Meanwhile, the US Federal Reserve's policy meet outcome is due late on Wednesday and the Street sees further tapering of $ 10 billion. But comfortable foreign exchange reserves with the Reserve Bank of India (RBI) shall ensure that the rupee volatility does not increase on Friday. Thursday the foreign exchange market is closed for Maharashtra Day.

"If the Fed sticks to paring stimulus by $10 billion as expected, and if there is no indication of interest rate hikes, then we may see little impact on the rupee," said Uday Bhatt, a senior foreign exchange dealer with UCO Bank. "The rupee should hold at 60 per dollar for the time being," he added.

Earlier in the session, a large state-owned bank was said to have sold dollars aggressively on behalf of a foreign client, which briefly lifted the rupee to a more than one-week high of 60.27, a level last seen on April 21.