The rupee today gained a staggering 68 paise to 53.71 to hit a two-and-a-half-month high on sustained selling of dollar by exporters, after partial deregulation of diesel prices.
This is the second biggest rise since September 21 last year, when rupee had gained by 93
paise, or 1.71 per cent.
The local currency commenced the day on a firm note at 54.09 against previous close of 54.39 at the Interbank Foreign Exchange
(Forex) market. After brief weakness during the day, it settled at 53.71, the highest level since November 1, 2012, registering gains of 68
paise, or 1.25 per cent.
"Rupee has appreciated because of the fiscal measures taken up by the government in the recent past like diesel price deregulation. Also, a risk-on mode in the global economy also contributed to the today's movement, which prompted FII flows into domestic market," Indian Overseas Bank Head (Treasury) B S Keshava Murthy said.
Forex dealers said consistent foreign funds inflow into local equities also boosted the rupee.
Foreign institutional investors pumped in USD 217.03 million (Rs 1,165.69
crore) into local stocks today, according to provisional BSE data.
Hemal Doshi, chief currency strategist of Geojit Comtrade said: "On the global front, all critical support for dollar has broken with strengthening of euro, that supported the domestic currency today".
Meanwhile, the BSE benchmark Sensex rose by 75.01 points to 20,039.04.
The dollar index, consisting of six major global rivals, was up by 0.09 pct while New York crude oil was quoting above USD 94 a barrel in Europe today.
"The rupee was seen trading near its two-and-a-half month high against the US dollar. The news of deregulation of the diesel prices yesterday continued to lend support to the rupee for the second straight session," said Abhishek
Goenka, (Founder & CEO, India Forex Advisors).
"The gains in the stock markets led by robust gains in the oil shares and better than expected quarterly results of ITC and HDFC also contributed to the gains in rupee," he added.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The INR extended its gains for the second straight session raking in a cumulative gain of around two per cent."
The premium for the forward dollar recovered on fresh payments from banks and
The benchmark six-month forward dollar premium payable in June rose to 163-165 paise from Thursday's close of 161-163 paise and far-forward contracts maturing in December also firmed up to 321-1/2-323-1/2 paise from 317-319
The RBI has fixed the reference rate for the US dollar at 53.9465 and for euro at 72.2050.
The rupee flared up further against the pound sterling to 85.63 from previous close of 87.17 and also remained firm against the euro to 71.75 from 72.61.
It too hardened against the Japanese yen to 59.81 per 100 yen from last close of 60.87.
© Copyright PTI. All rights reserved. Republication or redistribution of any PTI content, including by framing or similar means, is expressly prohibited without their prior written consent.