Re gains most in over a month on Fed's dovish policy outlook

Posted By: Staff
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Bucking the weak trend in stocks, the rupee today rose 31 paise, logging its best single-day gain in over a month, to end at 60.08 against the dollar as the American currency weakened on US Fed keeping its policy of ultra-low interest rates intact. Fresh selling of dollars by banks and exporters in view of good foreign capital inflows coupled with lower dollar overseas boosted the rupee, say forex dealers.

The rupee resumed higher at 60.06 per dollar as against the last closing level of 60.39 per dollar at the Interbank Foreign Exchange (Forex). It firmed up further to 59.85 per dollar, before ending at 60.08 per dollar -- a gain of 31 paise or 0.51 per cent.

It hovered in a range of 59.85 to 60.19 during the day. The rupee's rise today was the biggest since May 15. The dollar index, a gauge of six major global rivals, was down by 0.44 per cent today. "US Fed has once again downgraded its economic outlook for the US economy, which is a hint that interest rate hikes are going to be delayed further. As a result, US Dollar weakened against major currencies in the Asian markets and that has spilled over into strength for the local unit," said Anindya Banerjee, currency analyst, Kotak Securities.

Yesterday, the US Federal Reserve signalled that rising inflation won't trigger an interest rate rise any time soon, while Iraq turmoil sent oil futures to highest this year. Crude oil rose in Asia today following a surprisingly bullish US stockpiles report and on rising concerns that turmoil in Iraq will disrupt Middle East supplies. Benchmark for West Texas Intermediate rose and the one for Brent crude variety hit a nine-month high. Meanwhile, the Indian equity benchmark Sensex failed to maintain initial gains and ended lower by 44.45 points, or 0.18 per cent, at 25,201.80.


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