Rupee closes 12 paise higher against USD on rate cut hopes

Mumbai: The rupee ended 12 paise up at 63.70 against the American currency on fresh bouts of dollar selling by banks and exporters amid huge expectations of a rate cut by the Reserve Bank tomorrow. Strong capital inflows as well as firm local equities also bolstered the overall sentiment despite strong dollar overseas, forex dealers said.

The rupee resumed modestly higher at 63.80 against the week-end closing level of 63.82 at the Interbank Foreign Exchange and strengthened further to hit an intra-day high of 63.58 against the dollar. However, the local currency trimmed the gains on some dollar demand before finishing at 63.70, showing a gain of 12 paise, or 0.19 per cent.

The Reserve Bank is scheduled to review its policy rates tomorrow amid a growing clamour for rate cuts by industry to bring down the cost of capital and restore the economy's health. The RBI has so far cut the repo rate by 50 basis points in calendar year 2015.

Meanwhile, the dollar remained broadly higher against a basket of other major currencies amid growing expectations of rate hike by the US Federal Reserve even after data showed that the US economy contracted in the first quarter. The US dollar index was trading higher by 0.39 per cent at 97.33.