Reasons for Rupee's stellar rally against Dollar
The rupee gained 0.70% to close at 74.32/$, its strongest level since March 18. The US-based Brookfield is said to have brought in about half a billion dollars, creating instant demand for the rupee, three currency traders told ET.
Brookfield did not immediately reply to ET’s queries.
The global asset manager with $550 billion in investments has already committed to certain high-value projects in India. The inflows were said to be a part of that portfolio.
"The rupee turned volatile, breaking its relative stability,” said Bhaskar Panda, executive vice president at HDFC Bank. “Inbound investment flows helped the rupee gain, with currency traders not spotting any attempt to check the sharp rise. If equity/investment flows continue, the rupee is likely to rise further.”
"In the past two-three months the central bank has been intervening in the market, shoring up dollar reserves,” said Anindya Banerjee, currency analyst at Kotak Securities. After a long time, it sprang a surprise, and was conspicuous by its absence. It seems the central bank is equally mindful of the rupee liquidity in the market, especially at a time it may have to intervene to stop the rising yields.
“Traders waited for the central bank to intervene in the market, cutting a sharp rise in the rupee’s value, '' said K N Dey, United Financial, a Mumbai-based forex firm. “Many participants expecting the central bank to intervene suffered losses as the rupee gained significantly.”
The central bank did not intervene both in the inter-bank and the futures markets, dealers said