MUMBAI: The rupee continued its stellar run against the dollar to finish at a fresh 16-month high of 65.69 on Wednesday as exporters aggressively offloaded the US currency ahead of the Fed meet outcome. Massive capital inflows on hopes of more reform measures following BJP’s strong showing in the recently held state elections spurred the rupee’s biggest rally since early 2015. The domestic currency has risen 2.23 per cent since the beginning of the year.
Reacting to market specific developments, the home currency resumed on a strong footing at 65.76 from Tuesday’s closing level of 65.82 at the Interbank Foreign Exchange (forex) market. It gained further to hit a high of 65.41 on heavy dollar unwinding by banks and traders. However, traders said the RBI’s intervention through state-run banks capped the steep rise. The surging rupee is a headwind for exporters. Retreating from its intra-day high, the home unit finally settled at 65.69, showing a smart gain of 13 paise, or 0.20 per cent.
The RBI, meanwhile fixed the reference rate for the dollar at 65.5146 and for the euro at 69.6224. The resurgent rupee had rallied overnight by a hefty 78 paise — its biggest single day spike in recent past — to end at 65.82 in the aftermath of the decisive win for the BJP in Uttar Pradesh polls.