Rupee scales new 2-month high of 64.50, soars 20 paise vs dollar

Showing resistance against early volatility, the rupee today surged by a hefty 20 paise to end at a fresh two-month high of 64.50 against the beleaguered dollar even as S&P kept India's credit rating unchanged.

The rupee marked its best closing since September 20.

It had tumbled to a low of 64.83 in early trade.

In early trade, the rupee resumed almost flat with negative bias at 64.71 from last weekend level of 64.70 in knee-jerk reaction to the S&P rating outcome.

But, later drifted sharply to hit a fresh intra-day low of 64.83 on immense dollar pressure before a spirited recovery in mid afternoon deals.

After climbing a fresh high of 64.49 towards the tail-end trade, the local unit finally settled t 64.50, revealing a smart gain of 20 paise, or 0.31 per cent.

The rupee has appreciated 31 paise last week.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.6948 and for the euro at 77.1421.

Global rating agency Standard & Poor's on Friday kept its sovereign rating for India unchanged at 'BBB-minus' with 'stable' outlook saying vulnerabilities stemming from low per capita income and high government debt balance strong GDP growth.

India's rating reflects its strong GDP growth, sound external profile and improving monetary credibility on reform implementations, S&P said in a statement.

The rating stance taken by S&P Global Ratings comes days after Moody's Investors Service raised India's sovereign rating for the first time in over 13 years on growth prospects boosted by continued economic and institutional reforms.

Positive vibes created by the global rating agencies on India predominantly injected a new enthusiasm for forex market sentiment, a trader commented.

Moreover, improving macro fundamentals and growing expectations of more reforms that will boost long-term economic growth and attract healthy foreign inflows are helping rupee to maintain a strong upbeat trend, he added.

Crude prices slipped from two-year highs on prospects for increased output.

Brent crude, the international benchmark is trading down 0.52 per cent at USD 63.14 a barrel in early Asian trade.

Foreign investors infused over USD 2.6 billion in the country's capital markets this month so far, propelled by government's announcement of recapitalising PSU banks and India faring well in the World Bank's 'ease of doing business index'.

Meanwhile, heavy short covering at lower levels along with healthy buying in key financial and banking counters helped the domestic bourses to overcome a spell of early sharp volatility to end with moderate gains despite fragile Asian market sentiment.

Extending their uninterrupted winning run for the eighth straight session, the BSE Sensex rose over 45 points to close at 33,724.44, while Nifty added 10 points at 10,399.55.

In cross-currency trades, the rupee recouped against the pound sterling to settle at 86.09 from 86.13 per pound and also regained some lost ground against the Japanese yen to conclude at 58.00 per 100 yens from 58.03 last weekend.

However, it continued to rule weak against the euro and finish at 77.01 as compared to 76.73 earlier.

On the global front, the US dollar reversed the Asian recovery and fell back in the negative territory, hovering at around six-week lows against other major currencies in quiet trade largely impacted by subdued US macro data.

Sentiment on the greenback remained vulnerable after last Wednesday's minutes of the Federal Reserve's November meeting amid concerns over inflation outlook.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 92.59 in early trade.

Elsewhere, the common currency euro surged ahead to fresh two-month high against the US dollar earlier on Monday amid speculation that Germanys main opposition SPD party is mulling another coalition government with Chancellor Merkels CSU/CDU bloc.

Pound sterling, however, traded little changed after hitting a new 7-week high last Friday amid very positive Brexit talks.

In forward market today, premium for dollar declined due to sustained receiving from exporters.

The benchmark six-month premium payable in April fell to 114-116 paise from 117-119 paise and the far forward October 2018 contract also softened to 255-257 paise from 256-258 paise previously.