Home Market Rupee surges 57 paise against dollar, reclaims 67 level

Rupee surges 57 paise against dollar, reclaims 67 level

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Kolkata: The rupee gained 57 paise on Friday to close at 67.67 a dollar as banks across the spectrum sold dollars on behalf of their clients, surprising many and bringing relief to capital and bond markets.

This is the highest intra-day gain in the last 14 months.

The 1.82% fall in crude price in Asian trade over and above the 1.6% overnight gain along with the lower dollar index buoyed the market sentiment, helping the local currency appreciate further.

The rupee opened higher at 68.23 a dollar from 68.34 as state-owned banks sold dollars but it gained the maximum when a foreign bank was seen selling dollars in bulk, a forex dealer said.

“We saw large corporate flows from exporters too which led to this powerful rupee rally. Markets are also awaiting the final notification for FPIs to invest in shorter term paper which should cool yields and make rupee stronger,” said FirstRand Banks head of treasury Harihar Krishnamoorthy.

More rupee liquidity and stronger rupee also led to bonds recovering and yields going below 7.80.

“This is a good correction. The rupee may trade below the 67-mark in the next week although some pressure may be seen on Tuesday in anticipation of the two day bank strike,” said KN Dey, managing partner at forex advisory firm United Financial.

Public sector bank employees called a two-day strike from May 30 protesting Indian Banks Associations measly 2% wage hike offer.

Meanwhile, forex reserves dipped by $2.7 billion to $415 billion as RBI sold dollars to support the falling rupee last week, Reserve Bank of India data showed. This was the fifth weekly fall in a row as the pressure on rupee knocked off about $11 billion from the import buffer of Asias third largest economy.

The local currency fell to its 18-month low of 68.42 on May 23 and then gained from that level in the next two days.

“But we need to keep watching crude prices carefully as they are the sentiment driver,” Krishnamoorthy said.

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