The rupee on Monday rallied by 42 paise to close at a 16-month high of 45.34 against the U.S. dollar on heavy selling of the American currency by exporters and banks amid flat domestic equity markets.

Forex dealers attributed the sharp rally in the rupee to subdued dollar overseas against its major rivals. The dollar sentiment turned weak against euro and yen after poor U.S. job data ruled out hike in interest rates.

In fairly active trade at the inter-bank foreign exchange market, the rupee opened sharply higher at 45.40/41 a dollar from its previous close of 45.75/76. Later, it hovered in the range of 45.48-45.28 before closing at 45.33/34, a level not seen since September 10, 2008.

Meanwhile, after resuming higher the Indian benchmark Sensex on Monday ended barely flat. But Asian indices displayed a firm trend at the close. Global crude oil prices were trading above $83 a barrel in London on Monday. The Reserve Bank of India fixed the reference rate for the dollar at Rs. 45.36 and for the single European currency at Rs. 65.79 per euro.

The rupee premiums for the forward dollar ended steady to slightly lower on stray receivings by exporters and banks. In cross-currency trade, the rupee ended lower against the pound and the euro.

Keywords: RupreeDollarForex

More In: Markets | Business