The rupee today gained 21 paise to close at nearly six-week high of 46.14/15 against the dollar after RBI raised its key rates amid continued heavy capital inflows.
Sustained selling of the American currency by banks and exporters amid weak dollar overseas too boosted the rupee sentiment, dealers said.
In fairly active trade at the Interbank Foreign Exchange (Forex) market, the domestic unit started slightly lower at 46.38/39 per dollar as against yesterday’s close of 46.35/36 a dollar and immediately touched a low of 46.40 on initial weakness in local stocks.
However, it immediately recovered after the announcement of rise in short-term lending (repo) rate by 25 basis points and borrowing (reverse repo) rate by 50 basis points in the Reserve Bank of India’s (RBI) first mid-quarterly monetary policy review.
Sustained heavy buying by foreign institutional investors in local equities mainly kept the rupee on strong foot. FIIs picked up shares worth $ 2.3 billion in the current month so far after injecting nearly $ 2.4 billion in August.
The rupee later recovered its initial losses and ended up at 46.14/15, level not seen since August 9, 2010, a rise of 0.45 per cent.
The dollar index, consisting of six major currencies, was down by 0.2 per cent and global crude oil was trading above $ 75 a barrel in London today.
The Reserve Bank of India has fixed the reference rate for the dollar at Rs 46.30 and the euro at Rs 60.14.
In cross-currency trade, the domestic unit rose against the pound sterling and the Japanese yen while declined against the euro.
The rupee firmed up to Rs. 72.02/04 paise against the pound sterling from Wednesday’s close of Rs. 72.09/11 and also hardened against the yen to Rs. 53.87/89 per 100 yen from Rs. 54.38/40 previously.
It, however, moved down against the euro to Rs 60.37/39 per euro from its last close of Rs. 60.13/15.