A spectacular rally in domestic markets catapulted the rupee to a three-week high of 66.42 against the US dollar, after the Federal Reserve’s rate hike.
A spectacular rally in domestic markets catapulted the rupee to a three-week high of 66.42 against the US dollar, after the Federal Reserve’s rate hike. On the global front, the dollar traded two-week highs against a basket of its major peers.
The US Federal Reserve hike marks the end to the seven-year regime of near-zero interest rates in force since the worst economic disaster following Lehman Brothers’ bankruptcy in 2008.
The rupee opened firmly higher at 66.62 from Wednesday’s close of 66.73 at the Interbank Foreign Exchange Market against the backdrop of overnight developments and continued its strong upmove till the final trade to end with a solid gain of 31 paise, or 0.46 per cent at 66.42 — the level not seen since November 24. It briefly touched an intra-day low of 66.6750.
Frantic dollar selling by banks and corporates alongside unwinded long dollar positions by speculators helped the rupee to rally.
According to Reuters, the RBI was estimated to have sold $500 million to $1 billion on Wednesday to prop up the rupee in the lead-up to the Fed meeting.
Forex traders also cited active buying of bonds in secondary markets over the previous few days. They feel that the RBI wants to signal its intention to tackle “acute currency volatility”.
