Rupee ascends to fresh 3-week high, gains 11 paise vs USD

This is the best closing for the Indian currency since August 9, when it had closed at 63.84.

Heavy selling in the greenback by exporters and banks amid its weakness against other currencies overseas and a smart rally in local equities largely supported the rupee trade.

The domestic unit resumed marginally weaker at 64.03 against overnight close of 64.01 at the Interbank Foreign Exchange (Forex) market on month-end demand for the American currency from importers and banks amid strong dollar overseas.

After hitting a low of 64.0650 in mid-morning deals, the local unit suddenly reversed its trend to regain strength.

It touched a high of 63.89 towards the fag-end trade before concluding at 63.90, showing a gain of 11 paise, or 0.17 per cent.

Yesterday, the rupee had ended on a flat note at 64.01 against the US dollar.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.0154 and for the euro at 76.0439.

The dollar index, which measures the greenback's value against a basket of six major currencies, was high at 93.10.

In cross-currency trades, the rupee finished higher against the pound sterling at 82.19 from 82.62 per pound and hardened against the euro to settle at 75.68 from 76.44 earlier.

The rupee also settled firm against the Japanese yen to close at 57.80 per 100 yens from 58.16 yesterday.

Expectations of strong recovery in country's economy after overcoming from a shock demonetisation move late last year also bolstered overall forex trading sentiment, a dealer commented.

The GDP numbers, released after market hours, for April-June of 2017-18 showed the growth slowing down to 5.7 per cent from 6.1 per cent in the preceding quarter, according to the Central Statistics Office (CSO).

Besides, outflows of foreign funds and month-end dollar demand from oil companies along with aggressive hedging strategy adopted by importers in the wake of currency volatility kept rupee under little shaky in early trade.

Meanwhile, the greenback continued its near-term momentum -- a broad recovery since Tuesday ahead of US jobs data release also supported by month-end flows.

A spectacular fag-end rally in select front-line counters along with hectic short-covering mainly helped the equity markets to overcome the implied volatility of option expiring and extend their winning run for the second straight day.

The benchmark Sensex gained over 84 points to close at 31,730.49, while the broader Nifty rose by 33.50 points to settle at 9,917.90.

Elsewhere, the single currency Euro edged up modestly against the USD after slightly better-than-expected Euro-Zone inflation readings increased hawkish expectations at next week's ECB policy meeting.

In forward market, today, premium for dollar remained weak due to consistent receiving’s from exporters.

The benchmark six-month premium payable in January was quoted at 112-114 paise and the far forward July 2018 contract at 251-253 paise.

On the International energy front, crude prices stabilised following a slump the previous day following closure of US refineries amid demand slump, while gasoline prices hit USD 2 a gallon for the first time since 2015 on Thursday as flooding from storm Harvey knocked out almost a quarter of US refineries.

The International Brent crude was virtually flat at USD 50.88 a barrel from its last close.