Forex: The rupee gained further ground against the US dollar

Forex: The rupee gained further ground against the US dollar to end at near one-month high of 66.68 in a fairly volatile trading sessions on sustained selling of the American currency by banks and exporters amid a weak greenback tone. Stretching gains for a second straight week, the domestic unit strengthened by 14 paise, or 21 per cent after briefly reclaiming a four-month high of 66.32.

It has appreciated by a whopping 38 paise in the recent leg of upmove. A breathtaking rally in domestic equities alongside steady steam of foreign fund inflows predominantly supported the domestic currency. Foreign portfolio investors infused a net amount of USD 359.71 millions during the week as per SEBI's record.

Besides, growing hopes that the redemption of three-year foreign currency non-resident bank account or FCNR (B) and related outflows would not be troublesome in the midst of adequate forex reserves strengthened the rupee further.

The three-year deposits will mature this month. Heightened uncertainty over the Federal Reserve’s interest rate trajectory largely weighed on sentiment following a series of sluggish US macro data outcome, dragging greenback lower.

In the meantime, Urjit Patel started his innings as the 24th RBI Governor. After an extended weekend, rupee opened on a strong note at 66.53 from last Friday's closing level of 66.82 at the Interbank Foreign Exchange (forex) market and surged ahead to hit a high of 66.32 on heavy dollar unwinding.

However, the home currency turned highly volatile and suffered a setback toward the weekend due to sudden bout of dollar demand from importers, giving back some early gains to touch a low of 66.76. It later recouped some lost ground to close at 66.68, showing a gain of 14 paise, or 0.21 per cent.