Rupee Records Biggest Gain In Two Months After Exit Poll Results
The rupee appreciated by 48 paise, the biggest single-day gain in two months, to close at 69.74 against the dollar following sharp gains in equities and forex inflows after exit polls suggested another term for the ruling NDA government.
Forex traders said investors welcomed exit poll results that predicted a thumping majority for the current Bharatiya Janata Party-led government.
At the interbank foreign exchange, the domestic unit opened at 70.36 and advanced to a high of 69.44 during the day.
The currency finally settled at a nearly two-week high of 69.74, registering a rise of 49 paise or 0.69 percent against the dollar over its previous close. On Friday, the rupee had settled at 70.23 against the dollar.
This is the biggest single-day for the rupee since March 18 when the currency had zoomed by 57 paise or 0.82 percent.
According to WGC Wealth Chief Investment Officer Rajesh Cheruvu, India saw a remarkable strengthening in its currency after exit polls and some de-coupling of the rupee from other emerging currencies could be seen over the next few trading sessions.
Sentiments were also buoyed by positive opening in domestic equities, and foreign fund inflows.
The Sensex ended 1,421.90 points, or 3.75 percent, higher at 39,352.67. During the day, the gauge hit a high of 39,412.56 and a low of 38,570.04.
In a similar movement, the broader NSE Nifty soared 421.10 points, or 3.69 percent, to 11,828.25. Foreign investors put in Rs 1,734.45 crore on a net basis in equity markets Monday, provisional exchange data showed.
"Most of the exit polls have projected thumping majority for the NDA government. The government has taken bold steps in the last five years. This ensures policy continuity and required stability,”said Rushabh Maru, Research Analyst - Currency and Commodity, Anand Rathi Shares and Stock Brokers. “Hence, it will attract long term investors. So if the exit polls match the actual outcome then the rupee may head towards 68 levels in coming sessions”.
However, rising crude oil prices weighed on the domestic currency. Meanwhile, Brent crude, the global benchmark, was trading at 72.51 per barrel higher by 0.42 percent.
The Financial Benchmark India Private Ltd. set the reference rate for the rupee/dollar at 70.1666 and for rupee/euro at 78.4336. The reference rate for rupee/British pound was fixed at 89.7276 and for rupee/100 Japanese yen at 64.03.