OUR BUREAU Mumbai, August 27

The rupee rose to a two- monthhigh on Friday on the back ofbanks selling dollars with for-eign portfolio investors liningup to participate in fundrais-ing by India Inc and in the ab-sence of central bank interven-tion.

While the rupee appreciatedby about 53 paise to close at73.6950 to the dollar againstthe previous close of 74.2225,forex market players arenervous as the US Fed chiefJerome Powell could drophints of tapering of the stimu-lus in his scheduled speech onFriday at the annual JacksonHole economic policy sym-posium.

Stock indices rise The benchmark equity indiceson the BSE and National Stock

Exchange (NSE) ended over aquarter per cent higher on Fri-day. The S&P BSE Sensex endedabove the 56,000-mark for thefi�rst time at 56,124.72, up 175.62points (0.31 per cent), while theNifty 50 settled at 16,705.20, up68.30 points (0.41 per cent).

Emerging markets on edgeA hint of taper in Powell’sspeech could impact curren-cies of the emerging marketeconomies (EMEs). This actioncan trigger an increase in theinterest rate in the US, in turnleading to outfl�ows from EMEcapital markets.

The Reserve Bank of Indiahas built up a forex reserveswar chest of over $600 billionto deal with the possibility ofvolatile forex fl�ows. In the weekended August 20, 2021, the re-serves declined by $2.470 bil-lion to stand at $616.895 billion.

The Indian unit opened 5paise stronger on Friday at74.1725 per dollar over the pre-vious close, hit an intradayhigh of 73.6900 and a low of74.2025.

India Forex Advisors, in a re-port, said: “The rupee rose tothe highest level since June 18against the dollar as foreignbanks sold the dollar persist-ently for overseas investmentsinto Indian companies that arelooking to raise funds throughvarious means.

“A few foreign banks were onaggressive off�ers for the (Dol-

lar-Rupee) pair in anticipationof infl�ows in likely dollar bondissues.”

Anindya Banerjee, DeputyVice-President, Kotak Securit-ies, observed that after remain-ing in a narrow range between74.10 and 74.60 for over amonth, the USD-INR pair brokedown.

“Lumpy corporate dollarfl�ows, rising foreign portfolioinvestments, and strong senti-ments in the equity market ledto the sharp slide.

“The central bank was lessaggressive in defending the74.00 level and that causedstop-loss related selling fromoption writers,” he said.

Dollar not out of woodsBanerjee felt that the JacksonHole symposium will be anevent to watch but it may notbe enough to turn the tide forthe US dollar. Over the nextweek, he expects USD-INR tradein the 73.50-74.10 range, onspot.

Foreign banks sell $ to invest in India Incand RBI stays hand; Sensex vaults 56,000

Rupee climbs to two-month high