Mumbai: The Indian rupee recovered sharply on Friday after the market was reassured that the US Federal Reserve is not going to withdraw its easy money policy soon because of low economic growth in US, and on hopes that a sharp improvement in domestic current account deficit (CAD) seen on Thursday can be sustained.
The rupee strengthened to 59.39 a dollar, after opening at 59.95, a 1.36% gain from it’s previous close of 60.20 a dollar. The local currency hit an all-time low of 60.73 a dollar on Wednesday.
The fourth-quarter CAD stood at 3.6% of the gross domestic product against 4.4% in the year-ago period and a record 6.7% in the September-December quarter.
The exchange rate was also aided by dollar inflows from big exporters, including Reliance Industries Ltd, said currency dealers. Mint couldn’t independently verify this claim.
However, currency dealers said the Reserve Bank of India (RBI) did not sell dollars in the market to aid the exchange rate. The rupee largely mirrored other Asian currencies that gained against the dollar. Except the Indonesian rupiah and Japanese yen, most of the currencies in the region gained against the dollar on Friday even as the dollar index, which measures the greenback’s strength against major global currencies, was up 0.01% to 82.9130 points.