Rupee ends at 55.36/$, highest in last six sessions

The rupee strengthened against the dollar on Wednesday, on the back of a mild recovery in risk demand that boosted Asian equities earlier in the day, and a strong showing by Indian equity markets. It closed at 55.36, the highest level in the last six trading sessions.

The Indian currency had opened at 55.44/$ before hitting a day's high of 55.33 and held steady against the dollar in afternoon trade.

Indian stock markets too traded higher on Wednesday. The BSE's 30-stock Sensex soared over 400 points on talks of a possible cut in policy rates by the Indian central bank, as well as strength in global stocks, while the broader Nifty index approached the key 5,000 mark.

However, the Euro, which had strengthened against the dollar on Tuesday, later weakened to 1.2499/$ on Spain’s warning that it is being shut out of credit markets. Asian shares nudged up on Wednesday but were capped by concerns that Europe's financial strains could intensify without a global response. 

Spain's plea for Europe's help in reviving its troubled banks came after finance ministers from the Group of Seven major economies discussed progress towards financial and fiscal union in Europe in an emergency call on Tuesday. While they agreed to work together to deal with the problems in Spain and Greece, they took no immediate joint action.

Also Read: India Inc sees rupee falling to 58 to the dollar

The Indian currency has hit a string of record lows against the dollar in the past two weeks, with the latest on Thursday when it fell to 56.52. It has been the worst performing Asian currency this year, falling 6.35 per cent in the month of May, the biggest monthly fall in six months.

Traders have been saying that the Reserve Bank of India could intervene more aggressively, while perceptions the central bank could cut interest rates as early as this month may also contribute to a recovery in the rupee by helping boost a sagging economy. The central bank, however, has said that it would only intervene to control volatility in the currency, and not to direct the movement of the rupee. 

(With inputs from Thomson Reuters)