Rupee rises to 65.44/dollar, Sensex soars over 250 points

The rupee pulled back sharply below 65.50 per dollar amid choppy trade on Friday. The partially convertible rupee traded at 65.46 as against Thursday's close of 66.01 and much higher than day's low at 66.29. Stock markets followed, with the BSE Sensex surging over 250 points and the broader Nifty scaling the key 5,650 levels in afternoon trade. Market analyst Avinash Gorakshakar told NDTV that markets could run up on a continuous basis till the RBI policy is announced on September 20, but the rupee will be the key. Private lenders extended gains for a second day after banking stocks saw their biggest single-day gains in over 4 years on Thursday as the Reserve Bank of India raised overseas borrowing limits for lenders as part of a slew of measures unveiled by new Governor Raghuram Rajan. IT shares also recovered from a bout of profit-taking on Thursday. Traders expect marginal gains during the session on the back of measures taken by the central bank on Wednesday, but sentiment was wary ahead of the U.S. non-farm payrolls data in the evening. The rupee has gained sharply since Reserve Bank governor Raghuram Rajan unveiled a spate of measures late Wednesday to attract more inflows. The new steps to defend the rupee included a concessional forex swap rate to banks for attracting deposits from overseas Indians. "The governor's action plan was well accepted by market participants," said Shakti Satapathy, a fixed income strategist with AK Capital. "But the key would be the government's intent in addressing the CAD (current account deficit) and subsidy burden at a faster pace amidst positive U.S data points that might lead to an early exit by Fed's from the stimulus measures," he added. Fears of tapering in the U.S. have roiled emerging markets such as India for months, prompting foreign investors to sell currencies, stocks and bonds, which has supported the dollar against other currencies. Still, traders in India are now anticipating a period of relative consolidation as they await steps from a government whose measures so far, including steps to curb gold imports, have failed to impact markets much. The RBI is also expected to intervene heavily should the rupee weakens towards the record low of 68.85 touched on August 28. Despite Thursday's gains, the currency has still tumbled nearly 17 per cent so far this year. (With inputs from Reuters)

Rupee rises to 65.44/dollar, Sensex soars over 250 points

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