Mumbai: The rupee strengthened by 28 paise to close at 70 against the dollar on Thursday as a weak dollar prompted exporters and banks to sell the greenback, supporting the demand for the rupee. Strong overseas inflows for subscription to dollar notes of Export-Import Bank of India (EXIM) further supported the rupee.
At the Interbank Foreign Exchange market, the rupee opened stronger at 70.08 a dollar. The local unit moved in a range of 70.15 to 69.94 before finally ending at 70, showing a gain of 28 paise over its last close. The rupee on Wednesday had strengthened by 21 paise to close at 70.28 against the dollar. This was its highest closing level since January 8, when the rupee had finished at 70.21.
The dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.02 per cent to 96.85.
Foreign banks, including HSBC, Citi Bank, and BNP, were on the sell side. The Exim Bank on Wednesday had said that it raised $500 million by issuing a Reg-S 5-year bond issue and the proceeds will be used to fund projects.
Analysts said that optimism regarding a trade deal between the US and China and weakening of the greenback versus other currencies overseas also supported the rupee but are mindful of rising crude prices and polls.
Kotak Securities’ Anindya Banerjee said, “After the Indo-Pak tensions defused on 28 February, the rupee started outperforming its peers. The growing feeling in the market is that the risk of a hung Parliament has reduced significantly and because of which the rupee is strongest globally.”
He added: “But a factor to be watched is oil which has now risen to $66 per barrel. We expect the rupee to head to 69.70 against the dollar in the next few days.”
