Rupee snaps 2-day fall unfazed by Fed rate hike; up 10 paise

Mumbai
14 Dec 2017

The rupee broke off a two-session fall and rebounded by 10 paise to end at 64.34 against the US currency on fresh bouts of dollar selling by exporters a day after Federal Reserve's dovish rate hike.
Domestic currency market largely withstood volatility and impact from the latest US central bank rate hike overnight even as headline inflation accelerated further to 3.93 per cent in November.
Overall forex sentiment also took some comfort from lower than forecast second quarter current account deficit (CAD) data.
The country's CAD for the second quarter doubled to USD 7.2 billion or 1.2 per cent of GDP fiscal on annual basis, but narrowed sharply from USD 15 billion (2.5 per cent of GDP) in the preceding quarter, official data showed.
A spectacular rebound in local equities further supplemented the currency momentum in a healthy way.
Expectations of a comfortable victory for the BJP in Gujarat, the home state of Prime Minister Narendra Modi also weighed on the trading front.
Meanwhile, the Federal Reserve raised short term interest rates by a quarter point to 1.25-1.5 per cent for a third time this year and predicted more increases to follow in 2018.
The fed also upgraded the economic outlook, raising GDP growth forecasts and lowering the unemployment rate for the next year.
The dollar held steady against other major currencies ahead to a string of U.S. economic data due later in the day.
In the meantime, domestic equity markets staged a stunning rebound after two days of massive sell-offs on the back heavy fag-end buying spree even as investors turned more optimistic ahead of Gujarat exit polls later today.
The benchmark Sensex surged over 194 points to end at 33,246.70, while Nifty rose 59 points at 10,252.10.
Brent crude, the international benchmark is trading at USD 62.13 a barrel in early Asian trade.
The home currency resumed on a highly positive note at 64.35 from Wednesday's close of 64.44 at the Interbank Foreign Exchange (forex) market as currency traers largely shrugged off the Federal Reserves' widely expected U.S. rate hike.
It maintained the bouyancy throughout the trade and touched an intra-day high of 64.2450 in mid-afternoon deal before ending at 64.34, showing a smart gain of 10 paise, or 0.16 per cent. (PTI)