Rally in rupee is not surprising

The US Federal Reserve is expected to hike rates on Wednesday and the dollar has weakened marginally

The Indian rupee continued to strengthen sharply for the second day as foreign banks liquidated their long dollar positions aggressively after breach of critical levels.

At 3.35 pm, the rupee was trading at 65.63 a dollar, from its Tuesday’s closing of 65.82 a dollar. The rupee had closed at 66.61 a dollar last Friday, but the massive victory by the Bharatiya Janata Party (BJP) in Uttar Pradesh gave a thumbs up to India’s economic reforms agenda.

However, not everyone anticipated the rupee’s rapid rise against the greenback. Foreign banks had created stop losses at 66.30 a dollar level and then