Mumbai: Rupee rose to a one-month high against the dollar on Thursday on expectations that oil marketing companies (OMCs) will hike diesel prices which will help the government cut subsidiaries and rein in fiscal deficit.
“Rupee was seen appreciating immediately after the news flashed as it lowers the chances of credit down grade for India. The step is seen taken to control the widening fiscal deficit. The market seems to be little sceptical about how fast it will be implemented,” India forex advisors Pvt Ltd said in a note.
The rupee ended at 54.39 per dollar up 0.56% from Wednesday’s close of 54.69 per dollar after oil minister M. Veerappa Moily said OMCS have been permitted to raise diesel prices by a small quantum periodically till they are able to cover the loss they incur on the fuel, now Rs.9.60 per litre.
It had touched a high of Rs.54.22 per dollar earlier in the day, highest since 13 December.
“This announcement has created some positive sentiment which led to dollar sales in the market together with the fact that the stock market was also in positive territory,” said a dealer with a foreign bank.
The 30-share benchmark Sensex on BSE Ltd ended 146 points higher at 19,964 points supported by likely dollar inflows from foreign funds.