Mumbai, Dec. 11: The rupee raced to 48.15 against the dollar today, the highest point it has scaled in this calendar year and a far cry from the torrid days of May, when it had slipped below the key threshold of 49.
The currency’s appreciation in the recent past is being attributed to a steady supply of greenbacks, the weakening of the dollar against major world currencies and lingering concerns over recovery in the US.
Dealers believe there is room for more gains. “The rupee is undervalued by 2 per cent on a trade-weighted basis if one were to factor in dollar declines overseas,” sources said.
This morning, the currency was range-bound in early trading amid optimism that it would advance further. Some expected nationalised banks to act on behalf of the Reserve Bank of India (RBI) to check the currency’s rise by bidding for dollars, but that did not happen.
There was a steady flow of funds from exporters and remittances from NRIs, encouraging banks to go short on the greenback in the hope of more rupee gains.
At the close of 48.15, the currency was up five paise over Tuesday, when it finished at 48.19 after testing intra-day highs of 48.15 to a dollar.
Analysts say the leap from all-time lows of 49.08 in May has been 1.90 per cent. Today’s closing quote is similar to the level last December. In the forward segment, premiums on the dollar hardened. The six-month premium closed at 3.97 per cent compared with its previous finish of 3.96 per cent.
The surge comes at a time when the forex kitty is a record $ 66,925 million, up $ 337 million for the week ended November 29.
The Reserve Bank has said the management of forex reserves in recent years reflects the changing composition of balance of payments as it tries to reflect the risks associated with different types of flows.
With the central bank still expected to mop up dollars to raise the country's foreign exchange reserves, some analysts say the rupee will hover around 48.18.