The Indian rupee on Thursday bounced back by 25 paise to close at over one-month high level of 53.96 against U.S. dollar on a rally in local equities and fresh dollar selling by traders enthused by a lower trade deficit.
A weak dollar overseas and a further fall in prices of key commodities including crude oil also helped the rupee, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the local unit resumed better at Rs. 54.14 a dollar from previous close of Rs. 54.21 and immediately touched a low of Rs. 54.24.
With government saying March trade deficit stood at $10.31 billion from $13.5 billion in March last year, the rupee rebounded in line with a smart rally in domestic equities to touch a high of Rs. 53.95.
It finally concluded at Rs. 53.96, exhibiting a net rise of 25 paise or 0.46 per cent.
“The rupee gained amid trade data, positive comments from the Commerce Minister and the positive closing of Indian stock markets,” said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Seeking to boost exports which slipped 1.76 per cent in 2012-13, government on Thursday unveiled a slew of incentives for exporters and announced a package to revive SEZs.
Brent crude oil futures fell to $98-level in overseas markets, strengthening hopes that inflation slide further and give more headroom to RBI to cut rates, forex analysts said.
The Indian stock market benchmark S&P BSE Sensex on Thursday closed up by a robust 285.30 points or 1.52 per cent while FIIs bought shares worth Rs 206.68 crore on Wednesday, as per provisional data with stock exchanges.
The dollar index was down by 0.14 per cent against a basket of six major global rivals on expectations of a interest rate cut by the European Central Bank and caution ahead of an Italian presidential vote.