The rupee on Thursday bounced back by 54 paise to close at an almost two-month high of 61.39 against the dollar amid sales of the US currency by exporters, firm equities and capital inflows.
The local currency opened at 62.20 a dollar from the previous close of 61.93 and immediately touched a low of 62.29 at the interbank foreign exchange market.
It rebounded to a high of 61.32 on dollar selling by exporters and positive local equities before closing at 61.39, a rise of 54 paise or 0.87 per cent. It was the highest close for the local currency since 61.19 on August 13.
The dollar had shown strength on expectations US lawmakers would reach an agreement on the debt ceiling and prevent a default.
“The initial weakness in the rupee was mainly attributed to the strength in the US dollar,” said Abhishek Goenka, CEO of India Forex Advisors. “Later, a spur of gain was seen on the back of local banks selling dollars. The market is expecting some more measures to be announced, which would further help the rupee to gain.”
Mr. Goenka also said the rupee got support from an IFC plan to sell USD 1 billion of rupee bonds offshore and use the proceeds to finance private sector investment in India.
The International Finance Corporation (IFC), a member of the World Bank Group, on Wednesday announced the launch of a $ 1 billion offshore rupee bond programme to strengthen India’s capital markets and attract greater foreign investment.
The 30-share S&P BSE Sensex closed up 23.65 points after a choppy session. Foreign institutional investors bought a net Rs 326.58 crore of shares yesterday, as per provisional data with the stock exchanges.