Mumbai, Sept 6 (PTI): Rupee today jumped 77 paise to 65.24 and Sensex soared by 290 points to scale the 19K-mark on continued hopes triggered by new RBI governor Raghuram Rajan’s steps to push in more reforms in the financial sector.
Markets cheered the slew of proposals by Rajan, aimed at strengthening rupee and reviving growth, for the third straight day as investors appeared bullish.
Against Thursday’s close of 66.01, the rupee today ended at 65.24 — highest level in nearly 2 weeks — on heavy dollar selling, capital flows and weak American currency overseas.
This is the strongest closing since 64.30 on August 26 and marks over 5 per cent appreciation from record low of 68.85 hit on August 28.
Rajan has so far announced steps such as enhanced limits for exporters to re-book cancelled forward exchange contracts, a special concessional window to swap foreign currency non resident deposits and raised overseas borrowing limit of banks’ unimpaired tier-I capital.
Mirroring the rupee, Sensex today extended gains for the third day in a row, surging 290 points to end at highest level of 19,270 in over three weeks. The Nifty also closed at 5,680.
Banking shares, like ICICI, led the charge from the front as RBI’s earlier moves to curb liquidity and tame rupee, had pushed up short-term rates hitting lenders the most.
Financial major Barclays expects the improvement in rupee’s fortunes to provide an opportune moment for the RBI to start unwinding its liquidity-tightening measures, “possibly in September-October, albeit gradually.”
In July, the RBI increased both the marginal standing facility rate and the bank rate to 10.25 per cent. It restricted allocation of funds under the liquidity adjustment facility and raised cash reserve ratio norms. Some curbs on outward remittances by resident Indians were also imposed.
Meanwhile, gold continued to see downward pressure.
Barring Delhi where it rose by Rs 50 to Rs 31,000 per 10 gram, gold fell by about Rs 700 each in Mumbai and Kolkata, and slid by Rs 330 in Chennai.