Mumbai: The rupee rallied sharply against the dollar on 20 March, ending at a near 19-month high of 43.73/75 a dollar, 38 paise up from previous close of 44.11/12 on rising call money rates.
In a volatile trade at the interbank foreign exchange (Forex) market, the Indian currency resumed at 44.065/075 a dollar and rallied continuously during the day on the back of sustained buoyancy in the call money market.
Earlier, the rupee had touched a high of 43.69/70 on 26 August 2005, compelling the Reserve Bank of India to intervene to control the currency’s upsurge.
On 20 March, Banks were seen selling greenbacks in a bid to unwind long dollar positions as call rates rose sharply to 25% during the day, a forex dealer said.
The sharp rise in call money rates was attributed to increased outflow towards advance tax for the fourth quarter of this fiscal.
Low global oil prices — below $57 a barrel — and lack of dollar buying also contributed to the rupee rally, a banker commented.
The rupee is expected to remain strong if the outflow towards advance tax continues in the current month.
The RBI, however, fixed the reference rate for the US currency at Rs43.98 a dollar and for the single European unit at Rs58.49 per euro.
The rupee premiums on forward dollar ended sharply higher due to sustained paying pressure from banks and corporates.
Benchmark six-month forward dollar premiums payable in August ended at 90-92 paise, up 20 paise from the levels achieved on 16 March.
In cross currency trades, the rupee ended sharply higher against the British sterling, the euro and the yen.
The Indian unit ended strong against the sterling at Rs85.59/61 a pound from the close of Rs85.94/96 on 16 March, and shot up against the single European currency to Rs58.10/12 per euro against previous close of Rs58.81/83 per euro.
The rupee also spurted against the Japanese unit to end at Rs37.13/15 per 100 yen from last close of Rs37.84/86.