The rupee ended at an over two-month high on Friday amid dollar sale by foreign banks and companies. The appreciation in the rupee against the greenback is expected to continue even next week on the back of dollar flows to India.
The rupee opened at 54.20 against the dollar on Friday and closed at a day’s high of 53.71. It had closed at 54.39 on Thursday. The rupee had ended at 53.71 on November 1.
“The appreciation of the Indian currency against the dollar was due to dollar sale by foreign banks and IT companies,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai. It was the second straight day when the rupee strengthened against the dollar.
Thursday’s rupee appreciation was triggered by Petroleum Minister Veerappa Moily’s announcement of partial deregulation of diesel pricing by allowing oil companies minor increases in prices.
The market views this as a positive move by the government towards fiscal consolidation and it shall help in increasing capital flows.
According to Arun Thomas, manager (forex), Federal Bank, the strengthening of the rupee was also due to the appreciation of the euro.
The Street is of the view that worries over the Euro zone are easing. The bullish sentiments in domestic equity markets and the absence of major dollar demand from oil importers also helped the rupee to appreciate. Gonsalves said he expected a trading range of 53.50-54.25 a dollar.