The Indian rupee continued its north-bound journey for the fifth straight session, appreciating by 46 paise to close at 63.38 today after fresh RBI steps to boost foreign fund inflows and hopes of a diplomatic solution in Syria reduced the dollar's appeal as a safer investment.
The local currency was also boosted by consistent capital inflows and dollar sales by exporters.
The Reserve Bank of India (RBI) yesterday allowed swap facility for term deposits of lenders and relaxed norms for banks to borrow funds from overseas.
US President Barack Obama said he would pursue diplomatic efforts to remove Syria's chemical weapons, giving rise to hopes that the possibility of a military strike are fading.
The rupee opened at 63.90 a dollar from the previous close of 63.84 on the interbank foreign exchange market and declined to a low of 64.20 as local stocks fell.
It rebounded to a more-than-three-week intra-day high of 63 before settling at 63.38, a rise of 46 paise or 0.72 per cent. In straight five sessions, the rupee has spurted by 425 paise or 6.28 per cent.
"The expectation that the Syrian crisis might not develop into a full-fledged war has led to the reduction in the safe-haven demand in the US dollar and Japanese yen. All the emerging nations currencies are seen benefiting," said Abhishek Goenka, CEO of India Forex Advisors.
Foreign institutional investors pumped in USD 421.15 million yesterday, according to data from the Securities and Exchange Board of India. The benchmark S&P BSE Sensex stock index ended little changed today.
"Easing geopolitical tension in Syria is expected to stabilise global crude oil prices, which will help India to minimise the current account deficit," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "The trading range for the spot USD-INR pair is expected to be within 62.80 to 64.30."
Forward dollar premiums fell on fresh receipts by exporters.
The benchmark six-month forward dollar premium payable in February eased to 255-1/2-260-1/2 paise from Tuesday's close of 257-1/2-261-1/2 paise. Far-forward contracts maturing in August declined to 460-465 paise from 463-468 paise.
The RBI fixed the reference rate for the dollar at 63.9035 and for the euro at 84.6510.
The rupee continued to rally against the pound and closed at 99.98 from 100.17 previously and rose to 84.04 per euro from 84.53. It improved further against the Japanese yen to 63.18 per 100 yen from 63.64.