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Rediff.com  » Business » Rupee strengthens on wobbly dollar; up 4 paise at 66.61

Rupee strengthens on wobbly dollar; up 4 paise at 66.61

Source: PTI
Last updated on: September 26, 2016 19:53 IST
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Dollar's weakness against other currencies overseas on the back of prevailing state of uncertainty over the pace of Fed rate hike alongside robust capital inflows predominantly supported the domestic currency

The rupee maintained its firmer undertone against the dollar for the third straight day and ended at 66.61 on sustained selling of the American unit by banks and exporters.

Besides, dollar's weakness against other currencies overseas on the back of prevailing state of uncertainty over the pace of Fed rate hike alongside robust capital inflows predominantly supported the domestic currency to sustain its momentum.

The home currency opened substantially lower at 66.75 as compared to last weekend's close of 66.65 at the Interbank Foreign Exchange (forex) and lost further ground slightly to hit a intra-day low of 66.79 due to initial dollar demand.

However, notwithstanding the massive slide in domestic bourses, the rupee made a smart recovery towards the tail-end trade to touch a high of 66.60 before ending at 66.61, showing a gain of 4 paise, or 0.06 per cent.

It has appreciated by a good 41 paise in three-day move.

Meanwhile, the market regulator Sebi last week offered direct entry to well-regulated foreign investors for investing in corporate bonds and relaxed the norms for raising funds through infrastructure and real estate investment trusts.

In the meantime, the greenback traded narrowly mixed against other major currencies in the Asian session as traders attention focused on the outcome of the US presidential debate later in the day amid ongoing uncertainty over the timing of the next US rate hike.

The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was up 0.25 per cent at 95.17.

Meanwhile, RBI fixed the reference rate for the dollar at 66.70 and euro at 74.88.

In cross-currency trades, the rupee rose further against the pound sterling to end at 86.15 from 86.39, while fell back modestly against the euro to settle at 74.95 as compared to 74.75 last Friday.

It also retreated against the Japanese yen to close at 66.34 from 66.13 per 100 yens earlier.

In the forward market, premium for dollar displayed a easy trend due to lack of market-moving factors amid sustained receiving by exporters.

The benchmark six-month premium for February moved down to 159.5-161.5 paise from 160-162 paise and the forward August 2017 contract also edged down to 341.5-343.5 paise from 342-344 paise last weekend.

Meanwhile, domestic bourses remained under intense selling pressure for the second straight session on massive profit-taking due to expensive valuations after recent leg of spectacular rally amid global stock sell-offs.

The flagship BSE Sensex nosedived to close with a whopping 373.94 points at 28,294.28, while broader Nifty tanked 108.50 pts to 8,723.05.

Crude oil prices are trading modestly higher in the Asian session, recovering part of the ground lost after Friday's significant pullback ahead of the potential freeze output talks between OPEC and non-OPEC oil producers next week in Algeria.

Photograph: Reuters

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