Mumbai, India (BBN) – Indian rupee hit a 16-month peak against the dollar on Wednesday on hopes of increased foreign investments in equities, but the stock market flattened a day after the NSE index hit a record high.
Meanwhile, benchmark 10-year bond yields fell 3 basis points to 6.87 per cent after data released late on Tuesday showed that February consumer inflation came largely in line with expectations, reports The Hindu Business Line.
Sentiment has been boosted after results over the weekend showed that the ruling Bharatiya Janata Party (BJP) scored an overwhelming win in the key northern state of Uttar Pradesh.
The victory was widely seen as a strong endorsement of Prime Minister Narendra Modi’s agenda.
Foreign investors were net buyers of Rs 4,100 crore ($625.76 million) of shares on Tuesday, when the NSE index hit a record high of 9,122.75, according to BSE data.
That marked the biggest single-day net purchase since February 17, according to Thomson Reuters estimates.
This helped the rupee climb as far as 65.40 per dollar on Wednesday, its strongest since November 2015, compared with its previous close of 65.80.
Two traders said the Reserve Bank of India stepped in for a second straight day to cap the gains.
The rupee resumed higher at 65.74 against yesterday’s closing of 65.82 at the Interbank Foreign Exchange market today.
It advanced further to 65.40 before being quoted at 65.50, up 32 paisa at 11.45am local time.
The domestic currency hovered in a range of 65.78 and 65.40 during morning deals.
Meanwhile, the dollar index was trading lower by 0.06 per cent at 101.68 against a basket of six currencies in the late morning trade.
Overseas, the US dollar remained on tenterhooks in early Asian trade as all eyes are now on the US Federal Reserve meet which will soon offer clues on its monetary policy outlook.
Meanwhile, the benchmark Sensex was trading down by 10.48 points or 0.04 per cent at 29,432.15.