Rupee rises 77 paise to two-week high of 65.24

The rupee continued to strengthen against the dollar on the back of announcements by new RBI Governor Raghuram Rajan, rising 77 paise on Friday to close at 65.24, the highest level in almost two weeks.

Dollar sales by exporters, a weak US currency overseas and renewed capital inflows also helped the rupee to gain.

The rupee opened at 66 against the dollar from 66.01 previously at the interbank foreign exchange market and touched a low of 66.32. It bounced back to a high of 65 before settling at 65.24, a rise of 77 paise or 1.17 per cent.

The local currency has spurted 239 paise, or 3.53 per cent, in three sessions. This was the highest level for the rupee since August 26, when it had closed at 64.30.

Rajan, who took over as RBI chief on Wednesday, had announced steps to attract dollar inflows, including enhanced limits for exporters to re-book cancelled forward exchange contracts and a window to swap foreign currency deposits.

News from the venue of the G20 Summit in St Petersburg in Russia also appeared to give hope to investors.

The BRICS grouping, including India, on Thursday decided to launch a $100 billion currency reserve fund to help them navigate through an imminent phase out of the US stimulus.

Separately, India and Japan today expanded their currency swap arrangement to $50 billion from $15 billion.

“One important step for the rupee was taken at the G20 summit where India and Japan have extended their existing currency swap facility,” said Abhishek Goenka, CEO of India Forex Advisors. “This will enable our country to defend the exchange rate.”

The RBI’s liquidity-tightening measures may be rolled back by October as market sentiment and the rupee are expected to improve, Barclays said. The fresh RBI steps are likely to raise the possibility of better forex inflows in the next three months, it said.

The rupee helped stocks to rise, with the benchmark Sensex climbing 290.30 points or 1.53 per cent. FIIs injected a net Rs 1,101.41 crore into shares yesterday, as per provisional stock exchange data.