Rupee hits 7-week high against the dollar as CAD shrinks

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Rupee hits 7-week high against the dollar as CAD shrinks
The rupee was trading at a 7 week high as the Current Account Deficit (CAD) shrank to just $4.2 billion for the quarter ending Dec 31, 2013.

The rupee was trading at 61.47 to the dollar, a level last seen on Jan 21, 2014.

The reduction in the current account deficit, was due to contraction in the trade deficit, coupled with a rise in net invisible receipts.

Falling current account deficit helps to push the rupee higher. Read more on current account deficit and its impact on the rupee here

It maybe recalled that in September last year the rupee hit a lifetime low of 68.81 against the dollar, after India's fundamentals including its current account deficit worsened.

Dealers say that there is a good possibility that the rupee would continue to rally, given the improving fundamentals of the economy. There has also been steady dollar inflows from foreign funds, which has helped support the rupee.  Check currency rates here

Read more about: dollar, current account deficit
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