Rupee scales 2-week high: Key reasons that led to the rebound

Mumbai: The rupee on Tuesday rebounded by 22 paise to close at a two-week high of 64.89 against the US dollar. This is the highest closing for the domestic currency since November 6.

Maintaining a clear uptrend throughout the session, the home currency finally managed end at the day's highest level of 64.89, revealing a strong gain of 22 paise, or 34 per cent.

The rupee had settled 10 paise lower yesterday.

In cross-currency trades, the rupee bounced back against the pound sterling to settle at 85.90 from 86.30 per pound and also rebounded sharply against the Euro to close at 76.06 from 76.76.

The local unit continued its strong momentum against the Japanese yen to conclude at 57.66 per 100 yens from 58.06.

On the global front, the greenback held steady against other major currencies in cautious trade on Tuesday, amid ongoing political woes in Germany and uncertainty over a major tax reform plan in the US.

The dollar index, which measures the greenback's value against a basket of six major currencies, was up at 94.03 in early trade.

These reasons led to the rebound in Rupee

 

• Rupee cashed in on positive sentiments post Moody's upgrade of India's credit rating. The sovereign rating upgrade comes close on the heels of a sharp improvement in country's ranking in the World Bank's ease of doing business survey.
• Heavy selling in the greenback by exporters and banks as well as weakness in the dollar against other currencies overseas largely supported the rupee recovery.
• The local currency also benefited from a strong rally in local equities.
• Currency traders and exporters rushed to sell their receivables expecting a surge in dollar inflows from global investors in the face of Moody's decision to upgrade India's sovereign rating after a gap of 14 years.

 

With PTI Inputs