Rupee perks up two week’s high level on Europe debt deal

28 Oct 2011 Evaluate

Indian rupee headed for its strongest level in two weeks as dollar headed to its biggest decline in more than two years against a basket of major currencies after European leaders agreed on a deal to resolve debt crisis in Greece, raising hopes that it would contain the fallout on other euro-zone nations. The resolution came in the form of three pronged plan which included a 50 percent write-down on Greek government debt, increased leveraging of the European Financial Stability Facility bailout mechanism and agreements on plan to recapitalize the region's banks. Meanwhile, the healthy U.S. third-quarter GDP data too changed the outlook for the dollar to ‘bearish’, thereby making more room for riskier currencies.

The Indian currency tracing the gigantic gains of domestic equities stood up in trade while the strength of regional counterpart coupled with that of euro added to its glory. On the global front, euro came off a seven-week peak on Friday as investors took a breather after a huge relief rally in riskier assets following a deal on Europe's debt crisis, though investors were eyeing more short-term gains in the currency.

The partially convertible currency is currently trading at 48.83 on Friday, stronger by 67 paise from its previous close of 49.50 on Tuesday. It has touched a high and low of 48.99 and 48.77 respectively. The Reserve Bank of India's reference rate for the dollar stood at 49.65 and for Euro it stood at 69.15 on October 25, 2011. While, the RBI's reference rate for the Yen stood at 65.28 and the reference rate for the Great Britain Pound (GBP) stood at 79.3862. The reference rates are based on 12 noon rates of a few select banks in Mumbai.