MUMBAI: The rupee witnessed a surprise rally on Friday, breaking the 83 levels against the dollar to trade at an intraday high of 82.93 - up 40 paise in a day. The domestic currency closed at 83, gaining 33 paise from its previous close.
Dealers attributed the unexpected rally to a sudden inflow of dollars into the market which was seen to be due to overseas fund-raising by an
Indian corporate
in addition to foreign portfolio purchase in equity markets.
Dealers said that the corporate that raised dollar internationally could be the
Adani group
.
According to Reuters data, Friday's rally is the biggest single-day gain in more than eight months. Reuters attributed the gain to dollar sales by
custodian banks
for foreign investors. Overseas investors have bought shares worth $5.1 billion in December 2023 so far.
The dollar has been weak after the
US Federal Reserve
indicated that there would be no more rate hikes. The Fed chief's dovish remarks also raised hopes that the US central bank would start cutting interest rates earlier than expected.
"Looking at the present scenario and the year end approaching, I think the rupee will go back to 83.35 shortly. The rally gave a small window of opportunity for importers to buy dollars but the gap may get closed next week," said K N Dey a consultant who advises corporates on forex. He added that the second half is also likely to see outflows on account of repatriation of profits by multinationals including large Japanese companies.
Compared to other Asian currencies the rally in the rupee is belated.
The sharp decline in the trade deficit in November is also seen as a positive for the rupee. The growth in services exports is also seen as a positive given the slowdown in global demand.
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