Indian expatriates remitting money to their families back home have to dish out more riyals now as the Indian rupee strengthened yesterday to its highest level in two-and-a-half months. It gained for a second straight week as the government’s decision to partially deregulate diesel and a broad risk-on sentiment globally boosted the currency.
The government’s move continued to push up the local unit as it would help bring down the country’s yawning fiscal deficit in the medium to long term.
Traders said a broad risk-on mood following strong data in the world’s two biggest economies also cheered the rupee.
“The mood swing has happened for the better and we see the sellers (rupee) in a state of panic. However, some buyers are not letting the opportunity go and buying for the very near term,” said Satyajit Kanjilal, chief executive at Forexserve, a forex and fixed income consultancy firm.
“The USD/INR overall has turned lower after the breakdown below the key support at 54.50. Therefore, this could be the beginning of a most unexpected rally taking the dollar all way down to 51.50 and then may be even lower.”
Traders said dollar bids from oil firms prevented the rupee from gaining further.
The rupee closed at 53.71/72 per dollar. The unit had closed at 54.3850/3950 on Thursday.