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Rupee Edges Closer To Two-And-A-Half-Year High Vs Dollar: 5 Points

The rupee had hit nearly 30-month high of 63.44 against the US dollar on Tuesday.

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Rupee Edges Closer To Two-And-A-Half-Year High Vs Dollar: 5 Points

The rupee was higher at 63.47 against the US dollar in noon trade.


The rupee pulled back from early losses to edge closer to two-and-a-half-year high against the US dollar. The rupee had fallen to 63.57 against the US dollar today in early trade but pulled back to 63.45 against the US dollar. The rupee had hit nearly 30-month high of 63.44 against the US dollar yesterday before closing at 63.48. The rupee got a boost from positive domestic economic data and a broader weakness in the dollar.  At 11:58 am, the rupee was trading at 63.47 against the US dollar.
 

5 things to know about the rupee's rise against the US dollar:



1) The dollar index today languished near three-month lows today though it was up slightly at 91.946. On Tuesday, the dollar index had fallen to a three-month low. The dollar Index is a measure of the value of the US dollar relative to a basket of foreign currencies.

2) The greenback posted its biggest annual drop in 2017 since 2003. For the whole of 2017, the US dollar index slid more than 9.8 per cent, the greenback's worst annual performance since 2003. The dollar (USD) retreated in 2017, partly because economic growth picked up outside the United States, with other countries' central banks moving towards tighter monetary policy, lessening the perceived divergence between the Federal Reserve and others.

3) The rupee had risen almost 6 per cent against the US dollar in 2017, buoyed by strong inflows into Indian capital markets. Besides, the dollar had also wilted against other global currencies.

4) The rupee also got a lift from positive economic data released this week. India's factory activity expanded at the fastest pace in five years in December, a private sector survey showed on Tuesday, buoyed by a rise in output and new orders, which allowed firms to raise prices.

5) Some analysts expect the rupee to strengthen further from here. In first quarter of 2018, rupee could be mildly positive against US dollar and may rise up to 63.00 levels, says forex advisory firm IFA Global. "But on back of global growth and stronger data, US Fed along with other central banks could move towards rate hike and balance sheet trimming. This can be seen capping the rupee's gains above 62.50 levels in remaining quarters or till end of 2018. Overall, our view remains positive for rupee in 2018," the forex advisory firm added.


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