The currency, which ended 34 paise stronger, had climbed to 85.50/$1 during the day, stretching the winning run for the ninth straight day as foreign banks sold dollars, while overseas investors bought Indian stocks and bonds, traders said.
The rupee had previously closed at 85.97/$1, LSEG data showed.
The sharp appreciation of the rupee from its record low levels of 87.95/$1 seen in February caused exporters to sell dollars, prompting further appreciation, traders said.
“Exporters kept their positions unhedged because many thought the rupee would touch 88 levels and on the other hand, importers had hedged. Additionally, the Reserve Bank of India does not seem to be absorbing dollars,” said Anil Bhansali, head of treasury, Finrex Treasury Advisors.
The rupee has strengthened 2.1% during the month so far, and has outpaced all Asian currencies, LSEG data showed.Dollar inflows from foreign portfolio investors into Indian stocks and bonds also contributed to the rupee’s strength. FPIs bought $1.3 billion worth of Indian stocks and bonds in March, depository data showed.“There were dollar sales by foreign banks and exporters. Local banks, along with the RBI also seemed to be missing in the market today,” said Dilip Parmar, currency research analyst at HDFC Securities.
