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Rupee ends stronger despite equity fall

21 Dec 2016 Evaluate

Recovering from a two-day fall, Indian rupee ended stronger on Wednesday, due to increased selling of the American currency by exporters and banks. The domestic currency looked strong from the very beginning but losses in the equity market capped some rupee gains. Investors remained cautious over CRISIL’s report that the government’s demonetising Rs 500 and Rs 1,000 notes may yield lasting economic benefits but its immediate impact has been stunningly disruptive, with cash shortages roiling business plans. The report highlighted that the long-term aim of India’s demonetisation policy is to improve economic and public administrative conditions by forcing black markets and cash-based sectors of the economy to operate in the formal economy. On the global front, pound drifted lower against its major counterparts on growing concerns over Brexit, after the UK Prime Minister Theresa May denied a Parliamentary vote on the final Brexit deal agreed with the EU.

Finally, the rupee ended at 67.91, 14 paise stronger from its previous close of 68.05 on Tuesday. The currency touched a high and low of 67.96 and 67.84 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.87 and for Euro stood at 70.60 on December 21, 2016. While the RBI’s reference rate for the Yen stood at 57.70, the reference rate for the Great Britain Pound (GBP) stood at 83.96.The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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