Mumbai

After a brief consolidation phase, the rupee shot-up to end at a fresh three-month high of 64.04 against the beleaguered dollar on sustained selling of the US currency by exporters and banks even as the Federal Reserve raised interest rates once again.

Stretching the stunning rally for the fifth-straight week, the home currency garnered a solid 41 paise. It has appreciated by a whopping 112 paise during the multi-week rally.

The Indian unit largely withstood volatility and impact from the latest US central bank rate hike overnight even as headline inflation accelerated further to 3.93 per cent in November.

Overall currency market sentiment turned extremely bullish after the exit poll outcomes predicted BJP’s win in Gujarat for the sixth time and a clean sweep in Himachal Pradesh elections.

It was further supported by unwinding of long-dollar positions by speculators and some foreign banks with the US dollar down on shaky outlook for the tax reform progress.

Big-picture economic indicators like improving current account deficit and abundant FII inflows largely weighed on the trading front, a forex dealer said.

A smart rally in local equities also supported the rupee momentum.

It was further supported by unwinding of long-dollar positions by speculators and some foreign banks with the US dollar down on shaky outlook for the tax reform progress.

Big-picture economic indicators like improving current account deficit and abundant FII inflows largely weighed on the trading front, a forex dealer said. In global commodity trade, crude prices fell back from their fresh 2-year highs earlier this week, though prices were supported by continuing outage of a North Sea pipeline and Opec-led production cuts amid concerns that the global supply surplus could return in 2018 due to rising US output.

The International benchmark Brent crude future settled down slightly with a 0.3 per cent fall to $63.23 a barrel.

In the meantime, country’s foreign exchange reserves declined by $1.044 billion to $400.897 billion in the week to December 8 due to a steep fall in foreign currency assets, the Reserve Bank data showed.

Foreign investors and funds pulled out more than Rs40 billion from the domestic stock markets this month so far, mainly due to rising crude prices and widening fiscal deficit.

The outflow comes following an eight month high inflow of Rs197.28 billion in November.

At the Interbank Foreign Exchange (forex) market, the rupee resumed higher at 64.35 from last Friday’s close of 64.45 on steady dollar selling.

After briefly hitting a low of 64.56 in a midweek sell-off, the local currency staged a smart rebound to touch a high of 64.01 towards the fag-end trade.

It finally settled the week at 64.04, showing a healthy gain of 41 paise, or 0.64 per cent.

The RBI fixed the reference rate for the $at Rs64.0958 and euro at Rs75.5241, respectively.