PremiumThe rise in the local unit coincided with the dollar index, which measures the greenback against six currencies such as Euro, Pound Sterling and Yen, falling by over a percent to 106.86.
A big dollar sell -off on the offshore or so called non deliverable forwards (NDF) market on the intervening night of Thursday -Friday probably caused the rupee to gap up 1.13 paise, the most in almost four years, against the dollar on the spot market here, believe currency market analysts.
“This very rare sharp movement was likely caused by a sell off of dollar versus rupee on the NDF market overnight, which presented a golden opportunity to importers to lock in at sub-81 levels," said KN Dey, managing partner, United Financial Consultants who advises corporates on currency risk management.
The sharp rise in rupee, which Dey believes to be “momentary" allowed importers to buy the dollar at 80.70 levels and below.
“Only last week rupee traded at 82 levels," Dey added.
The rise in the local unit coincided with the dollar index, which measures the greenback against six currencies such as Euro, Pound Sterling and Yen, falling by over a percent to 106.86. The index has slumped from a 52-week high of 114.78 by September end to 106 levels.
Dey expects the dollar to strengthen again to 81.5-82 levels.
However, Anindya Banerjee research head of currency derivatives at Kotak Securities, expects the rupee to appreciate to 79.7 at which level it could face upside resistance.
“The rupee is in an appreciating trend for now," Banerjee said.
The NDF market falls outside the RBI’s purview and as the name suggests, trades are settled in cash.