Mumbai: The rupee continued its highly bullish run for the third-straight week and ended at a fresh two-month high of 64.46 against the beleagured dollar even as S&P kept India's credit rating unchanged.
Mounting a strong rally, the home currency settled with a smart 24 paise gain. Expectations of robust capital inflows against the backdrop of Moody's recent sovereign rating upgrade for India largely kept forex market sentiment buoyant despite impending Fed rate hike concerns and surging crude prices.
Heavy unwinding of dollars by some foreign banks and corporates also supported the upbeat trend. Positive vibes created by the global rating agencies on India predominantly injected a new enthusiasm.
Though, the global rating agency Standard & Poor's kept its sovereign rating for India unchanged at 'BBB-minus' with 'stable' outlook saying vulnerabilities stemming from low per capita income and high government debt balance strong GDP growth.
The rating stance taken by S&P Global Ratings comes days after Moody's Investors Service raised India's sovereign rating for the first time in over 13 years on growth prospects boosted by continued economic and institutional reforms.
Moreover, improving macro fundamentals and growing expectations of more reforms that will boost long-term economic growth and attract healthy foreign inflows are largely helping rupee to maintain a strong upbeat trend, a forex dealer said.
A weak dollar overseas trend also weighed on trade despite progress toward tax cut legislation as Special Counsel Mueller brings down Michael Flynn, striking at the heart of team Trump.
In global commodity trade, crude prices spiked higher, heading toward fresh 2-1/2 year highs after two key crude producing nations agreed to limit their output through the end of 2018.
International benchmark Brent crude surged USD 1.11, or 1.8 per cent, to USD 63.74, not far off last month's high of USD 64.65 that marked the best intraday level since June 2015.
The forex market was shut on Friday in view of Id-E-Milad holiday. At the Interbank Foreign Exchange (forex) market, the rupee resumed soft at 64.71 from last Friday's close of 64.70 and drifted further to a low of 64.83 due to strong month-end dollar demand.
However, overcoming the initial wobble, the local currency staged a spirited recovery to hit a high of 64.27 before ending at 64.46, revealing a smart rise of 24 paise, or 0.37 per cent. The Indian currency has strengthened by a whopping 70 paise, or 1.07 per cent to the dollar in three-week surge.
In the meantime, country's foreign exchange reserves reclaimed the USD 400-billion mark again, rising by USD 1.208 billion to touch USD 400.741 billion in the week to November 24, according to the weekly data from the Reserve Bank.
Foreign investors infused over USD 2.6 billion in the country's capital markets this month so far, propelled by government's announcement of recapitalising PSU banks and India faring well in the World Bank's 'ease of doing business index'.
