The domestic currency has firmed up by close to 5.5 per cent against the dollar since February on the back of a significant portfolio capital inflows of about USD 27.5 billion. Moreover, the Indian currency has appreciated by 3.7 per cent against the Chinese Renminbi since February, resulting in surge in cheaper imports from China.
The rupee has risen more than six per cent this year against the dollar. This is in contrast to six consecutive years of depreciation.
It took nearly two years for the Indian rupee to finally break the psychological 64 level. The rupee has been one of the strongest currencies in the world in 2017.
The rupee rose to as much as 63.7575 per dollar, its strongest level since Aug. 10, 2015, from its close of 64.0750 on Tuesday. Traders estimated foreign banks had sold around $1 billion worth of dollars.
The domestic unit hovered between 64.41 and 64.4625 during morning deals before quoting at 64.45 at 1030 hrs. Overseas, the US dollar struggled near a 13-month low against a basket of major currencies in early Asian trade, as US political woes dampened hopes for quick passage of President Donald Trump's stimulus and tax reform agenda.
The pound has depreciated by as much as 15 percent against the euro and 13 percent against the dollar since the Brexit vote.
The stock market zooming to record highs in early trade cleared the way for the rupee's upmove, traders said. But the dollar made headway overseas after US jobs data, which came as a dampener for the rupee.
"Gold fell slightly as a rally in global stock markets saw investor appetite wane for the precious metal," ANZ analysts said in a note on Monday.
Despite a rate hike from the Federal Reserve, the US dollar index declined yesterday on account of weaker-than- expected retail sales and CPI data, said the report of HDFC Bank's Treasury Research Team.
Earlier, the rupee resumed lower by 6 paise to 64.49 as against yesterday's closing level of 64.43 per dollar at the Interbank Foreign Exchange (Forex) Market.
The rupee resumed higher by 9 paise to 64.35 per dollar as against last Friday's closing level of 64.44 per dollar at the Interbank Foreign Exchange (Forex) Market.
Surge in the rupee in the past few sessions was on account of FII inflows into equities and weak dollar in the overseas market.
The rupee resumed lower at 64.91 per dollar as against the yesterday's closing level of 64.89 per dollar at the Interbank Foreign Exchange (Forex) Market. Later, it recovered on dollar selling by banks to 64.80 before falling again to 64.94 at 1100 hrs.
According to the research firm GFMS, smuggled gold supply had fallen between November 2016 and mid-March 2017.
The rupee made a tentative recovery of 16 paise at 64.68 against the dollar at the start of the session after banks and exporters hit the sale button for the US currency.
After opening stronger against the dollar, the Indian rupee pared its gains on Wednesday as state-owned banks bought the dollar heavily on behalf of the Reserve Bank of India, dealers said.
Since the start of the calendar year the rupee has gained nearly 6 percent against the dollar and 2 percent against emerging market currencies, largely on account of glad tidings on the economy and political fronts. Post demonetisation, it has gained from a strong showing by the BJP in the U.P. election and from parliament clearing hurdles for a GST launch. Crude oil prices continue to remain range-bound, with the OPEC nations curtailing oil production.
Indian rupee fell to nearly a one-month low on Tuesday as demand for the dollar strengthened by foreign institutional investors looking to exit their positions or hedge their exposure.
Despite the dollar gaining against other currencies, a positive stock market and increased inflow from foreign portfolio investors supported the rupee.
"Overall the rupee has been strengthening this year due to higher foreign fund inflows due to reforms like GST. But now exporters are also selling dollars on one hand and they are started covering (buying dollars) their position on the other," FirstRand Bank Treasury Head Harihar Krishnamurthy told PTI.
The rupee resumed higher at 64.12 a dollar as against the last weekend's level of 64.24 at the Interbank Foreign Exchange market and moved in a range of 63.9975 and 64.19 before quoting at 64.18 at 1100 hours.
The rupee resumed higher at 64.42 against the dollar as against yesterday's closing level of 64.44 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed up further to a 3-week high at 64.27, before quoting at 64.29 per dollar at 1100hrs, showing a gain of 15 paise.
The rupee resumed lower at 64.64 per dollar as against its last closing level of 64.56 at the Interbank Foreign Exchange (Forex) Market. It dropped further to 64.67 in view of initial dollar demand from banks and importers on the back of higher greenback in the overseas market.
Capital outflows, in small lots, also weighed on the rupee while rally in domestic equities restricted the rupee fall to some extent, a forex dealer said.