MUMBAI: The rupee, which has been bleeding for long, has made a dramatic recovery Wednesday rallying over 30 paise to close at 86.9675 against the dollar from 87.270 in the previous session. This is the highest single-day gain since February 11 when it the unit has rallied by 65 paise.
The support was also reflective of the equity market rally to the rune of more than 1%, ending the longest losing streak for the Nifty since the index was formed in 1996.
The rally came after the market sentiment improved as the rupee began the day on a low note at 87.23, but reflecting the strong equity rally, the unit rallied and closed at 86.9550.
If there is no more surprises on the trade war from, it could paves the way for the unit to head towards 86.50 and possibly towards 86 in towards the end of the month, said Anil Kumar Bhansali of Finrex Treasury Advisors.
Further, easing dollar index also helped the rupee to recover sharply during the day.
The dollar index, which measures American currency's value against six major global peers--- the euro, the yen, the Canadian dollar, British pound, the Swedish krona, and the Swiss franc--fell to 105.061 at close from 105.743 in the previous trading session. Dollar index has eased from 106.743 on Monday.
Dollar index has eased amid concerns over slowing growth and the impact from tariffs on the US economy outweighed any potential boost from the ramping up of levies on Canada, Mexico and China.
Adding to the weakness of the dollar was a dovish remark from a Federal Reserve official who, acknowledging the growing economic uncertainty, said the monetary policy is currently restrictive and can be adjusted as needed, reinforcing market expectations of a further rate cut, another trader said.