Rupee posts biggest single-day rise in 10 yrs

Driven by the sustained rise in shares, heavy dollar sales by corporates and the unwinding of long dollar positions by banks, the Indian rupee posted its biggest single-day gain in more than a decade on Tuesday. The rupee closed at 47.69/71 per dollar, two per cent stronger than 48.64/65 at Monday's close. Last week, the rupee had dropped to a record low of 50.29.
According to dealers, it was the biggest single-day gain for the rupee since January 19, 1998, when the rupee had risen 3.6 per cent after the central bank had taken a number of steps including a hikes in the cash reserve ratio, repo rate and bank rate. “There was a lot of dollar supply and no real demand in the market. People are now expecting more foreign inflows following the RBI cut in CRR, SLR and repo rate on last Saturday,” dealers said. Dealers said dollar in-flows from a large pharmaceutical company also helped the rupee rally.
Hopes that cuts in bank lending rates would help credit flow more freely and ease a cash squeeze also boosted the sentiment.