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Rupee hits fresh 2-1/2 month high vs US dollar

Saturday, Feb 4, 2017,11:25 IST By joji A A A

Mumbai | The rupee continued its stellar run against the US currency and closed at a fresh 2-1/2 month high of 67.31 on heavy dollar unwinding by speculative traders and exporters late Friday.

Stretching its powerful rally for the 8th straight session — its biggest winning run in recent past, the home unit appreciated by another 6 paise against the greenback.

Futuristic and growth-oriented Budget proposals predominantly triggered optimism in the currency markets amid expectations of heavy capital inflows even as speculators are shorting dollar against the rupee ahead of even risk globally, a trader commented.

Moreover, lack of populist measures in the Budget rekindled rate cut hopes at its monetary policy review next week.

The American dollar remained under pressure ahead of January’s US employment data later in the day and worries about the impact of still-uncertain fiscal policy.

The domestic currency opened a tad higher at 67.35 as compared to Thursday’s close of 67.37 at the Interbank Foreign Exchange (Forex) market.

But, soon retreated to trade lower at 67.42 for a brief period due to some dollar demand from importers before regaining strength in mid-afternoon deals.

It touched fresh intra-day high of 67.32 towards the tail-end trade before ending at 67.31, revealing a gain of 6 paise, or 0.09 per cent — the level not seen since November 11 2016 when the rupee was closed at 67.25.

On weekly basis, it has appreciated by a whopping 72 paise against the dollar.

Most Asian currencies were on track for weekly gains as worries about US President Donald Trump’s policy woes largely weighed on the greenback.

The US dollar index was trading higher at 100.01 in late afternoon session.

The RBI fixed the reference rate for the dollar at 67.3825 and for the euro at 72.4429.

Crude prices rebounded sharply on renewed geopolitical uncertainties following rising tension between Iran and the US over a ballistic missile test by Tehran this week.

In worldwide currency trade, China’s central bank surprised by raising short-term interest rates, in a further sign of a tightening policy bias as the economy shows signs of steadying and also containing capital outflows and reining in risks to the financial system created by years of debt-fueled stimulus.