Rupee Jumps 31 Paise To 67.90 On Eve Of RBI Policy Review

Mumbai: The rupee on Tuesday staged a strong recovery by gaining 31 paise to end at 67.90, its highest level in three weeks, on heavy dollar selling amid expectations of a rate cut by RBI on Wednesday.

Forex dealers said the rupee also drew support from a firm trend in equity markets alongside dollar unwinding by some foreign banks.

At the Interbank Foreign Exchange (forex) market, the local unit opened firmly higher at 68.14 from Tuesday's close of 68.21.

It kept the favourable momentum intact to hit an intra-day high of 67.8650 in late afternoon deals before ending at 67.90, showing a smart gain of 31 paise or 0.45 per cent.

Hardening expectations for an interest rate cut by the apex bank in its Wednesday's policy meet to rejuvenate the sagging economy against the back drop of softening inflationssupported the currency upmove.

This is the currency's highest closing since November 16, when it had ended at 67.94 against the dollar.

In worldwide trade, the US dollar traded little changed as investors eyed economic data ahead of a potential interest rate hike at the Federal Reserve's upcoming meeting.

The US dollar index was quoted marginally at at 100.32 in late afternoon.

Meanwhile, the RBI today fixed the reference rate for the dollar at 68.0322 and euro at 73.1074.

In cross-currency trades, the rupee strengthened further against the pound sterling to finish at 86.60 from 86.71 and also edged up against the Japanese yen to close at 59.54 from 59.73 per 100 yens earlier.

The home currency, however, weakened further against the euro to settle at 73.11 as compared to 73.01 yesterday.

In the forward market, premium for dollar continued to show lacklustre trend owing to lack of market moving factors.

The benchmark six-month premium for May was marginally up at 129.5-131.5 paise from 128.5-130.5 paise and the far-forward November 2017 contract was quoted with small change at 272.5-274.5 paise from 272.5-274 paise yesterday.

On the equity front, domestic bourses firmed higher for the second straight session due to sustained buying led by frontline heavyweights as well as short-covering amid hopes of a rate cut by the RBI.

The flagship Sensex rose 43.66 points to finish at 26,392.76, while Nifty added 14.40 points to 8,143.15.

Crude prices retreated from one-year highs on Tuesday, as traders took profits following the sharp rally in the wake of last week's decision by the OPEC to cut production also data showing rising production from Russia.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)