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Pushing the momentum through year- end, the Indian rupee today capped off a fabulous 2017 at a fresh four-month high of 63.87 a dollar, rising by a good 21 paise amid bearish dollar sentiment.
This is the highest closing for the home currency since September 8 this year.
On year-over-year basis, the rupee appreciated by a whopping 405 paise, or 5.96 per cent, as compared to 2016-end level of 67.92.
The year 2017 gave a massive edge to the Indian currency when compared to its counterparts in other Asian and emerging economies, after a long six-year hiatus.
Frantic dollar unwinding by banks and exporters along with bullish local equities, further impending bout of strength. Besides, the prevailing bearish sentiment for the American unit proved to be a catalyst for the Indian rupee.
Also helped by dynamic capital inflows, the year undoubtedly marked an incredible comeback and a new beginning for the home currency even as the country witnessed a dramatic and eventual transition to a cash-less economy.
The performance of Asia’s best currency has been largely impressive this year as it managed to swim against cyclical slowdown and global currency volatility against the backdrop of US political headlines, echoing its robust resilience.
This performance has been founded on a combination of factors such as highly bullish macro-economic fundamentals and easing monetary policy dynamics, as well as by the strength of global economy.
At the Interbank Foreign Exchange (forex) market today, the rupee opened modestly higher at 64.05 from Thursday’s close of 64.08.
Maintaining its strong ascent, the local unit breached the key 64 resistance level to hit a high of 63.78 in mid afternoon deals before ending at 63.87, showing a smart gain of 21 paise, or 0.33 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 63.9273 and for the euro at 76.3867.
A breathtaking rally in domestic equities further supplemented the currency momentum during the year.
2017 turned out to be a remarkable year for equities, with benchmarks surging past milestones and rewarding investors with stellar 28 per cent returns.
In 2017, The Sensex and Nifty surpassed the 34,000 and 10,500 levels for the first time, shrugging off below-expected corporate earnings as well as global uncertainties.
Meanwhile, the key US Dollar Index languished near a one-month low in pre-holiday lacklustre trading and is all set to end the year with a loss of over 9 per cent.
The dollar index, which measures the greenback’s value against a basket of six major currencies, continued to struggle near multi-week lows and was down at 92 in early trade.
While, crude is on course for a second annual rise following a much-anticipated extension of production curbs by OPEC, Russia and other non-OPEC members in an effort to rebalance the global oil market.
In cross-currency trades, the rupee remained under pressure against the pound sterling and ended at 86.27 per pound from 86.10 and dropped against the euro to settle at 76.53 compared to 76.45.
The local currency, however, regained against the Japanese yen to finish at 56.77 per 100 yens from 56.79.
On the global front, the dollar continued to fall against other major currencies, the last trading day of the year amid thin volume ahead of the New Year’s Day holiday weekend.
Elsewhere, the common currency euro continued its bullish bias for the third consecutive session to hit over a 3-month highs against the US dollar, while the pound sterling touched a fresh three-week high in early European session.
In forward market today, premium for dollar displayed a steady to weak trend due to lack of market moving factors.
The benchmark six-month premium payable in May ended steady at 118-112 paise, while the far forward October 2018 contract softened to 253-255 paise from 254-256 paise earlier.
The rupee had started the year on weak footing post demonetisation with the currency plunging below the key psychological 68-mark.
Besides, Donald Trump’s election victory in US presidential polls and his populist promises which set off a dollar rally sent the home currency tumbling to hit a fresh 2017 low of 68.35.
Headwinds in the form of slowing-economic fears accompanied by panic capital flight amid unsupportive global factors kept forex sentiment highly bearish.
Consolidating its strong gains, the Indian rupee traded in tight band of 64.00-65.00 whipsawed by ever-shifting odds of a Fed rate hike this year before breaking all resistance level to end the eventful year 2017 at a fresh 4-month high of 63.87, snapping a six-straight year of downtrend.