Rupee soars to 3 month high, up 20 paise on BJP’s poll win

The rupee rebounded by 20 paise to close at a three-month high of 64.04 against the US dollar, building on the momentum gathered after the BJP’s win in Gujarat and Himachal Pradesh assembly polls.

The domestic currency had lost 20 paise on Monday to end at 64.24 a dollar on a day that saw the home unit plunging by as much as 70 paise in intra-day trade after initial result trends showed that the ruling BJP might get a tough fight from the Congress in Gujarat.

But towards the fag-end of the trade, the rupee recouped most of its losses after participants became certain that the poll outcomes in both states would be in line with expectations.

Besides, heavy dollar unwinding by speculative traders and exporters further supported the rupee upmove.

The forex trading sentiment was further bolstered by robust capital inflows and domestic equity indices hitting fresh all-time highs as investors turned optimistic on BJP’s electoral success and positive global cues.

The dollar held steady against other majors currencies in quiet trade as investors remained cautious regarding progress on the US tax reform front.

At the Interbank Foreign Exchange (forex) market, the rupee opened a tad higher at 64.22 against Monday’s close of 64.24 on fresh bouts of dollar selling.

But later gaining strength, the home currency breached the 64-mark to hit an intra-day high of 63.94 in mid afternoon trade before concluding at 64.04, showing a smart gain of 20 paise, or 0.31 per cent.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.1205 and for the euro at 75.6365.

The flagship Sensex shot up over 235 points to close at 33,836.74, while Nifty jumped nearly 75 points to 10,463.20.

The dollar index, which measures the greenback’s value against a basket of six major currencies, was up at 93.14 in early trade.

In cross-currency trades, the rupee continued to rule firm against the pound sterling and ended at 85.70 from 85.81 per pound and hardened against the Japanese yen to settle at 56.87 per 100 yens from 57.07 earlier.

It also recovered against the euro to finish at 75.63 from 75.74 yesterday.

Elsewhere, the common currency euro edged down against the dollar as data from Germany suggests business leaders in Europe’s largest economy have become less optimistic about the future.

In forward market today, premium for dollar remained weak due to sustained receiving from exporters.

The benchmark six-month premium payable in May edged down to 125-127 paise from 126-128 paise and the far forward October 2018 contract also softened to 262-264 paise from 263.50-265.50 paise.

On the global energy front, crude prices edged up as the Forties pipeline outage in the North Sea and voluntary production restraint led by OPEC supported crude, although soaring output in the United States put a cap on gains.

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