The rupee recouped its early losses to close with sharp gain of 19 paise at two-month high of 66.43 against the dollar today even as stock markets plunged after government’s drive against black money and Donald Trump’s win in the US presidential polls.
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A suspected RBI intervention and panic selling of dollar by traders in afternoon trade helped the rupee post strong gains and close at two months high levels, a forex dealer said.
In line with weak equity markets, the rupee fell sharply by 31 paise to intra-day low of 66.93 against the US dollar in late morning deals.
The benchmark BSE Sensex had nosedived by 1,689 points in opening trade on early US election trends showing Trump’s lead and government’s move to withdraw notes of Rs. 500 and Rs. 1000 denominations.
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However, the rupee took a sudden reversal from its early downtrend in late afternoon deals largely led by adequate dollar supplies from the central bank along with panic dollar selling by speculative traders after the historic episode of US poll outcome, forex dealers said.
The rupee briefly touched an intra-day high of 66.40 before concluding at 66.43, showing a smart gain of 19 paise, or 0.29 per cent — the highest close since September 8.
On the global front, the dollar took a battering against its major rivals after a shock win for Republican Donald Trump.
The dollar Index, which crumbled to a low of 95.88 in early trade (the recent peak on October 25 was 99.12), was quoted down 0.25 per cent at 97.64 in the afternoon trade.
Fading imminent Fed rate hike after the poll outcome and subsequent frantic dollar unwinding helped the rupee to stage a resounding recovery, a dealer said.
In a biggest-ever move to curb black money, the government yesterday demonetised Rs. 500 and Rs. 1,000 currency notes.
The RBI today fixed the reference rate for the dollar at 66.7968 and euro at 74.9727.
In cross-currency trades, the rupee continued its surge against the pound sterling and finished at 82.59 from 82.73, but retreated modestly against the euro to end at 73.71 as compared to 73.61 yesterday.
It also fell back against the Japanese yen to settle at 64.47 from 63.69 per 100 yens earlier.
Foreign portfolio investors (FPIs) remained net buyers for the second straight day and bought worth a net Rs 86.66 crore yesterday, as per provisional data.
On the equity front, the BSE Sensex plummeted sharply by 338.61 points to end at 27,252.53, while the broader Nifty slumped 111.55 points to 8,432.
In the forward market, premium for dollar fell sharply due to fresh receiving by exporters.
The benchmark six-month premium for April dropped to 163.5-165 paise from 171.25-173.25 paise and the far-forward October 2017 contract also slumped to 337.5-338.5 paise from 347-349 paise.
Crude prices recovered to trade above the USD 46 a barrel after the initial knee-jerk reaction to Donald Trump’s surprise victory.