Mumbai, Oct. 7: The rupee continued its march today, touching a 38-month high against the dollar following strong foreign fund inflows, export earnings and NRI remittances. The currency is expected to consolidate these gains if the euro strengthens against the greenback.
The rupee finished today at 45.3300/3325 per dollar, up around 11 paise over its previous close of 45.4350/4400. The currency has thus gained around 6 per cent so far this year.
In a hectic trading today at the interbank foreign exchange market, the rupee breached the crucial 45.40-dollar barrier early in the day boosted by strong inflows.
While the rupee opened at 45.40/42 per dollar and shot to a day's high of 45.3050, it was held at 45.35/37 per dollar for a major part of the day mainly due to an intervention by the Reserve Bank of India through spot dollar purchases from nationalised banks.
“The rupee would have risen further without the RBI intervention,” a dealer said.
Analysts said apart from heavy foreign fund inflows, a recurring weak dollar against the Euro may also contribute to the rise of the rupee tomorrow. This has led to exporters selling their receivables.
According to Vivek Royzada, an analyst at Mecklai Finance, the rupee may hit the 45.25 mark against the dollar if the Euro strengthens against the greenback.
“For the Euro, a good resistance level is 1.18 to the dollar. If the currency crosses this level, we may see the rupee appreciating to 45.25,” he said.
Dealing room analysts feel that the Euro may be in for further appreciation against the dollar after the outgoing ECB chairman had said yesterday that the bank would not intervene to curb the appreciating currency.
Sources said the underlying sentiment for the rupee is buoyant following the robust foreign fund inflows coupled with heavy investments by non-resident Indians. Foreign institutional investors have made net equity purchases of around $126.7 million on Friday.
They have invested over $3.20 billion so far this year in the country's equity markets.
With India Inc expected to unveil robust second quarter numbers, it is felt that foreign fund inflows will be further strengthened.